Hint-Week 6 Chapter 12: see #70 (Excel) \& Q30 (discussion) DBS is a manufacturer of hi-tech digital devices in Melbourne. It uses a special part to make its devices. DBS requires an average of 24,000 units of this special part every year in its manufacturing process. The major supplier of the special part that DBS has been dealing with, is a preferred supply chain partner who charges a price per unit of $9000 for the part. Each order costs $1700 to process. Because of limited storage space, the operations manager wants to factor in inventory holding cost at 34.5% of unit cost. You have been asked to: (1) Determine the economic order quantity (EOQ) and annual total cost assuming no waste disposal (4 marks) (2) Environmental considerations, material losses and waste disposal can be included in the EOQ model to improve inventory management practices. Assume that on an average 12.25% of the parts that DBS purchases are damaged in transit thus becoming unusable and have to be disposed of. Disposal cost is $640 per unit. Find the new EOQ and total annual cost when the disposal cost is considered. What implications does this have for DBS' sustainability practices? (4 marks) (3) Explain the implications to the operations manager of DBS if estimates of inventory holding costs include fixed, semi-variable, and pure variable costs while setup (order) costs include only pure variable costs. (4 marks) Part B (12 marks) Hint - Week 4 Chapter 9: see #36 and #37 (Excel) \& Q16 (discussion) In the above data table, the operations manager of DBS Manufacturing Company has provided you historical data on their annual requirement of the special component over the past ten years. (4) What is the forecast requirement for next (i.e., cieventh) year using a twa-year and three-year simple moving average? Compute the MSE for each of those two moving averages and compare your results. (4 marks) (5) Using the same data table, find the best single exponential smonthing model by evaluating the Mse, starting. with an apha of Q.10 and changing alpha in increments of 0.10. How does the best single expanential smoothing model compare with the best moving average model you found in (4) ? (4 marks) (6) If the DBs operations manager asked for your advice as to whether it is better to use regressionbased forecasting models or time-series forecasting models, what would your advice be and why? (4 marks) Part C (12 marks) Mint - Week 3 Chapter 6: see 36, 137 and 138 (Encel) \& Q19 (dilscussion) (7) DBS is evaluating the alternative of manufacturing a part that is currently being outsourced from an outside supplier. The relevant information is pravided belaw: (i) For in house manufacturing: Upfront fixed cost =$53,000,000 Variable cost per part =$6750 For purchasing from supplier: Purchase price per part =$9000 What will the demand need to be in order to justify maiding the components in-house? \{2 marks\} (ii) In the event that a forecasted increase in demand does not materialue and the marketing department rather expects the demand to drop to 17,500 units next year, then what will be the maximum price per part that DBS would be willing to pay to the supplier? (2 marks) (B) Going forward, if it is eventually found to be a better decision to make the components in-house, DES will then need to select an optimal location point to set up its manufacturing facility. Ghen the following location information and expected material movements between several retail outlets and the intended manufscturing facility, find and plot the best location using centre-of-gravity method: \begin{tabular}{|c|c|c|c|} \hline Retail outlets & x & Y & Material movements \\ \hline 1 & 13 & 16 & 23000 \\ \hline 2 & 15 & 8 & 16000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline 3 & 10 & 12 & 122022 \\ \hline 4 & 7 & 6 & 10000 \\ \hline 5 & 5 & 13 & 30000 \\ \hline \end{tabular} (9) Using one or more relevant examples, explain to the DBS aperations manager some of the potential consequences of not understanding or considering non-quantifiable factors like local culture and practices when taking lacation decisions. (4 marks) Part D (12 marks) Hint-Week 5 Chapter 10: see 35 (Excel) 8022 (discusslon) There are three distinct types of digital devikes; namely TX (base model), TY (mid. range model) and TZ (top.range madel), which DBS Manufacturing Company makes and sells to its customers. The operations manager has decided to combine arders for the same product type from customers to increase work order size and therefore be able to make one large production run per product type. speciality machinery is used to make these products, and it is time-consuming to ciean the machinery and set them up agan between production runs. Esch machine and ope \begin{tabular}{|c|c|c|c|} \hline Product Type & Setup time [seconds) & Processing time (minutes] & Work arder quantity \\ \hline TX & 1220 & 0.070 & 4500 \\ \hlineTY & 940 & 0.054 & 2120 \\ \hlineTI & 2250 & 0.860 & 7560 \\ \hline \end{tabular} (10) What is the tatal workload (demand) in hours for the above work order moc? (4 marks) (11) How many machines will it take to do this wark in one, two or three days? What might you say if DBS asked for your expert advice on how might this process be further improved? (4 marks) (12) DBS is contemplating increasing its lengrterm capacity in light of its strategic deciaion to enter new markets. Explain to the DBS operations manager the pros and cons of each of the long iterm capacity expansion strategies. (4 marks) Part E (12 marks) Hint - Week 2 Chapter 3: see 029 (discussion) (13) The DaS operations manager wants to focus on sustainability. Explain to the DBs operations manager whether sustainablity is best viewed as a stratezy or as a competitive priority. (6 marks) Mint - Week 9 Chapter 16: see 030 (discussion) (14) Explain to the DBS aperations manager how quality management concepts can help to support their sustainablity efforts. Find one or more relevant examples to support your explanation