Assignment-3 Quantitative Methods (Stat-201) Student's Name: _________________________________________________ Student's ID: ___________________________________________________ CRN No.: ______________________________________________________ Note: All the questions are to be attempted. Section-I State whether the following statements are True or False. (15=5) 1. In transshipment problem, the number of units shipped into a transshipment point should be equal to the number of units shipped out. 2. The linear programming model of the product mix problem only includes constraints of the less than or equal form. 3. The purpose of the Economic Order Quantity (EOQ) model is to achieve a balance between the cost of holding inventory and the cost of stock outs. 4. The two fundamental decisions that you have to make when controlling inventory are: (1) how much to order, and (2) how much money to spend. 5. If in an inventory management problem lead time is 3 days and daily demand is 25 per day then re-order point is 50. 2 Section-II Circle/tick the right answer from the answers given below. (15=5) 1. In production scheduling LP problems, inventory at the end of this month is set equal to ________. A) inventory at the end of last month + this month's production this month's sales B) inventory at the beginning of last month + this month's production this month's sales C) inventory at the end of last month + last month's production this month's sales D) inventory at the beginning of last month + last month's production last month's sales E) inventory at the end of last month - this month's production + this month's sales 1. The "point at which to reorder" depends directly on which of the following? a) EOQ b) Ordering cost c) Lead-time d) Storage costs 2. The EOQ model without the instantaneous receipt assumption is commonly called the A) quantity discount model. B) safety stock model. C) planned shortage model. D) production run model. 3. Mark Achin sells 3,600 electric motors each year. The cost of these is $200 each, and demand is constant throughout the year. The cost of placing an order is $40, while the holding cost is $20 per unit per year. There are 360 working days per year and the lead-time is 5 days. If Mark orders 200 units each time he places an order, what would his average inventory be (in units)? A) 100 B) 200 C) 60 D) 120 2. When using a general LP model for transportation problems, if there are 4 sources and 5 destinations, which of the following statements is true? A) There are typically 4 decision variables and 5 constraints. B) There are typically 9 decision variables and 9 constraints. C) There are typically 20 decision variables and 9 constraints. D) There are typically 9 decision variables and 20 constraints 3 Section-III Answer the following Essay Type Questions. You can use QM for Window or Excel to solve the following questions but you must attach the screen print of solutions. (35=15) 1. The table below describes a transportation problem: (a) Use the northwest corner method to get an initial solution. (b) What is the cost of the initial solution? (c) Formulate the problem as a linear programming problem. 2. Consider the material structure tree for item A below. Assume 15 units of A are needed. (a) (b) (c) (d) How many units of B are needed? How many units of C are needed? How many units of D are needed? How many units of E are 4 3. Flemming Accessories produces paper slicers used in offices and in art stores. The minislicer has been one of its most popular items: Annual demand is 6,750 units and is constant throughout the year. Kristen Flemming, owner of the firm, produces the minislicers in batches. On average, Kristen can man-ufacture 125 minislicers per day. Demand for these slicers during the production process is 30 per day. The setup cost for the equipment necessary to produce the minislicers is $150. Carrying costs are $1 per minislicer per year. a. b. c. d. How many minislicers should Kristen manufacture in each batch? How many orders per year are needed with the optimal policy? What is the average inventory if costs are minimized? If lead time is 2 days, what should be the re-order point? e. What will the minimum total annual cost