MGMT 3340 OPERATIONS MANAGEMENT SPRING 2015 Assignment Five Part 1 The Toledo Mudhens, a minor league baseball team, breaks an average of seven bats per week during a 42 week season. The team purchases it bats from a national supplier. The order cost is $195 and the annual holding cost is 23 percent of the purchase price. 1. 2. 3. 4. 5. What is the annual demand for bats? If bats cost $30.00 each, what is the economic order quantity for bats? What is the total annual cost associated with the EOQ quantity? What impact will an increase to $295 in the order cost have on the EOQ quantity? Suppose the Mudhens break an average of 9 bats per week during the season, what impact will this have on the EOQ quantity? (Assume the order cost is $175) Assume the bat manufacturer offers the Mudhens the following price schedule Order Quantity 0 - 49 50 - 143 144 or more Price per Unit $30.00 $29.00 $28.50 6. How many bats should the team order if the discount applies to all units? 7. What is the total annual cost associated with the best order quantity? Part 2 Below is the Bill of Materials (BOM) and Master Production Schedule (MPS) for a chair. The number in the parenthesis indicates the quantity needed and the lead time is shown in weeks. C h a ir (1 ) (1 w e e k ) L e g A s s e m b ly (1 ) (2 w e e k s ) Legs (4 ) (1 w e e k ) Week Quantity Needed 1 0 2 0 S eat (1 ) (1 w e e k ) B ack (1 ) (1 w e e k ) S tre tc h e rs (2 ) (2 w e e k s ) 3 0 4 45 5 65 6 75 7 90 8 85 1. Determine the timing of the Planned Receipts and Planned Order Releases for the chairs assuming Scheduled receipts of 25 units in week 2 and 40 units in week 4 and a Projected On-hand Inventory of 20 units. Assume a L4L lot sizing rule with a lead time period of 2 weeks. Item: Chairs Description: Lot Size: L4L Lead Time: 2 week 1 2 3 4 Week 5 6 7 8 Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Receipts Planned Order Releases 2. Determine the timing of the Planned Receipts and Planned Order Releases for the leg assemblies assuming Scheduled receipts of 35 units in week 1 and a Projected On-hand Inventory on 40 units. Assume an Economic Order Quantity lot sizing rule where the EOQ is 100. Item: Leg Assembly Description: Lot Size: EOQ = 100 Lead Time: 2 week 1 2 3 Week 4 5 6 7 8 Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Receipts Planned Order Releases Extra Credit The daily demand for a product is 17 units with a standard deviation of 2.6 units. The review period is 30 days with a lead time of 14 days. Management has a set policy of satisfying 95% of demand from items in stock. At the beginning of the review period, there are 120 units in inventory. How many units should be ordered