ADM 3301 M, N and P Assignment #2 Problem # 1 The product structure tree of product A and the Master Production Schedule (MPS) are given below. The lead times and available inventories of each item are found in the following table. A E(1) Table 1 C(2) B(3) C(1) Master Production Schedule for A Period 7 1000 Winter 2017 D(2) Item Lead Time Available Inventory A 2 weeks 200 B 2 weeks 1000 C 1 week 1500 D 3 weeks 8500 E 4 weeks 900 8 1200 Page 1 ADM 3301 M, N and P Assignment #2 (a)Given the available inventories, how many additional units of E must be ordered if a total of 2,000 units of A are required? Show your work. (Hint: You do not need to develop an MRP plan; also, do not specify when the units of E must be ordered: we only want the total number of E to order). (b) Given the available inventories, how many additional units of C must be ordered if a total of 2,000 units of A are required? Show your work. (Hint: You do not need to develop an MRP plan; also, do not specify when the units of C must be ordered: we only want the total number of C to order). (c)Treat the following questions independently; show your work for each answer. Given the available inventories and assembly lead times, what is the maximum amount of product A that could be supplied to customers: i) now (i.e. at the beginning of week 1)? Briefly Justify. ii) within the next two weeks (i.e. on the beginning of week 3, assuming we are at the beginning of week 1)? Show your calculations. (d) Given the available inventories, assembly lead times, and the master production schedule. Construct a Materiel Requirements Plan (MRP). (e) Prepare a time-phased product structure. Assuming no available inventory, how many weeks are needed to produce one unit of A. Problem # 2 Katharine Hepburn, Inc. has received the following orders: Perio d Order Size 1 2 3 4 5 6 7 8 9 10 0 40 30 40 10 70 40 10 30 60 The entire fabrication for these units is scheduled on one machine. There are 2,250 usable minutes in a week, and each unit will take 65 minutes to complete. Develop a capacity plan, using lot splitting, for the 10-week time period. Problem # 3: Supply Chain Management Discussion Questions (a)What are the objectives of a supply-chain management? (b) What is vertical integration? Give one example of backward and forward integration. (c)What is the difference between postponement and channel assembly? Winter 2017 Page 2 ADM 3301 M, N and P Assignment #2 (d) Describe some ramifications of the bullwhip effect? What is the primary solution to the bullwhip effect? Problem # 4 DAT, Inc. produces digital audiotapes to be used in the consumer audio division. DAT lacks sufficient personnel in its inventory supply section to closely control each item stocked, so it has asked you to determine an ABC classification. Here is a sample from the inventory records: Item 1 2 3 4 5 6 7 8 9 10 Average Monthly Demand 700 200 2,000 1,100 4,000 100 3,000 2,500 500 1,000 Price per unit $6 $4 $12 $20 $21 $10 $2 $1 $10 $2 Develop and ABC classification for these 10 items. Problem # 5 Color View is a manufacturer of monitors for personal computers. Color View's newest monitor is X-435 model. The company expects sales of this model to run at the rate of 6,000 per year for a while. The facilities for producing this model are shared with several other models. While these production facilities are devoted to the X-435 model, the production rate is 2,000 monitors per month. The cost each time the facilities are set up for production run for this model is $7,500. The annual cost of holding each of these monitors in inventory is estimated to be $120. (a) Determine the economic production lot size. (b) Find the corresponding annual setup cost, annual holding cost and total variable inventory cost per year. (c) How long each production run last and how frequently should they occur? (Give your answer in month). (d) What is the maximum inventory level? Why is this less than the production lot size? Problem # 6 The bookstore at State University purchases sweatshirts emblazoned with the school name and logo from a vendor. The vendor sells the sweatshirts to the store for $38 apiece. The cost to the bookstore for placing an order is $120, and the holding cost is 25% of the average annual inventory value (i.e. 25% of the vender selling price of the sweatshirt). The bookstore manager estimates that 1,700 sweatshirts will be sold during the year. The vendor has offered the bookstore the following volume discount schedule. Order Size 1-299 Winter 2017 Discount % 0 Page 3 ADM 3301 M, N and P Assignment #2 300-499 2 500.799 4 800+ 5 The bookstore manager wants to determine the bookstore's optimal order quantity given the foregoing quantity discount information. Show your work and give sufficient details. Problem # 7 Weekly demand of a product is stationary and has been forecasted using exponential smoothing. The expected demand is 196 units per week and the standard deviation of weekly demand is 25. The item is purchased from a vendor at a cost of $10 per unit: the ordering cost is $50 with a lead time of one (1) week; The holding cost is $6 per unit per year. Assume there are exactly 52 weeks per year. The following questions are all based on these data, but are independent. (a)Assume the manager decided to adopt a fixed-order-quantity model, and wishes to maintain a 90% service level. Calculate the optimal order quantity and the reorder point. Show your work and give sufficient details. (b) Assume the manager decided to adopt a fixed-order-quantity model, but decided not to carry any safety stock (e.g. the size of the safety stock is 0). Calculate the probability of stocking out during the lead time. Show your work and give sufficient details. (Reminder: this question is independent of question (a)). (c)Assume now the manager decided to adopt a fixed-time-period model with T = 4 weeks as review period (i.e. time between orders). Assume the beginning inventory is 300 units. What should the order quantity be so that 98% of the demand will be satisfied? Show your work and give sufficient details. (d) The production manager wishes to set up a fixed-time-period inventory system so that the probability of stockout is at most 2.5%. However, given storage space constraints, the size of the safety stock must be at most equal to the expected demand over one week which is 196 units. What is the maximum time between orders (e.g. T is the time between two orders) that would meet these criteria? Show your work and give sufficient details. Source: Problem 2 and Problem 3: J. Heizer and B. Render; Operations Management, 10th edition, Prentice Hall, 2010 Problem 4: F. Robert Jacobs and Richard B. Chase, Operations and Supply Chain Management (14th edition), McGraw-Hill/Irwin. Problem 5 Hillier, Frederick S., Mark S. Hillier 2014. Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets. (5th ed.). McGraw-Hill/Irwin. New York. 618p. Problem 6: Bernard W. Taylor III, Introduction to Management Science (8th edition), Pearson Prentice Hall. Winter 2017 Page 4 \f\f\f\f