Part I. Economic Production Quantity (22 points)

1. Determine Inventory Holding Cost (Ce): Based on your companys financial statements obtained from (1) and the element of inventory holding cost (Ce) from #2 above, Provide the followings in your answer report: (1) Answer requirement 3: A list of cost elements and value of each cost element that should be included in

2. determine the companys inventory holding costing (Ce) (3 points)

   (2) Answer requirement 4: Compute the estimated inventory holding cost (Ce) for one box of finished goods per month. Note that the values in your companys financial statements are results from two months. Show computation details. List all assumptions you used in the computation as needed. (2 points)

3. Determine Production Capacity (P): Note that the maximum production quantity was 24,000 boxes per day when your company started its operation. Provide the followings in your answer report:

(1) Answer requirement 5: The value of clean up time reduction investment (the value in account 478000

Lean Manufacturing Program Expenses) and value of additional machine purchase (i.e., in addition to

the original 24 million euro in account 11000 Machinery and Equipment purchase). Write ZERO if your company did not invest in any of two capacity increase activities. (1 point)

(2) Answer requirement 6: What is your companys current production capacity in terms of (a) boxes per hour and (b) boxes per month (a month has 20 working days) with consideration of the answer requirement 5 above? (2 points)

5. Determine Demand (D): Analyze your companys sales report (ZVC2 and/or ZVA05) and compute the average total boxes sold for each product for each month. Answer requirement 7: Provide your answers in a table similar to the one shown below. (4 points)

##F01 ##F02

...

Total average

sales quantity

Month 1 (round 1) Month 2 (round 2)

Monthly sales quantity (D) =

Average selling price

Month 1 (round 1) Month 2 (round 2)

Average selling price per box =

6. Determine transaction/order cost per production (A): The setup/cleanup time was 8 hours when switching to a different product in production when your company started operation. Provide the followings in your answer report: (1) Answer requirement 8: Copy the values of clean up time reduction from the answer requirement 5 above.

   What is your companys current clean up time in terms of hours per product switch. (1 point)

   (2) Answer requirement 9: Compute the transaction/order cost for each production run (i.e., approximation of transaction/order cost per production) using the clean up time in hours, production capacity per hour (answer requirement 6), and the average selling price per box (answer requirement 7). (2 points)

7. Answer requirement 10: Compute Economic Production Quantity (EPQ) based on values obtained from (1) (6) above. The EPQ notation and formulas are provided below: (3 points)

Part II. Capacity Management (8 points + 5 extra credit points)

1. Answer requirement 11: Provide a screenshot (or screenshots) of your companys complete production tracking report (ZCOOIS) with required information marked in the sample screenshot below (1 point)

2. Perform analysis to answer the following questions:

Answer requirement 12: What is the total number of boxes produced in month 1 (round 1) and month 2 (round 2). Provide computation, analysis, or proper supporting evidences to receive credit. (3 point)

Answer requirement 13: What is the actual production capacity utilization rate for month 1 (round 1) and for month 2 (round 2) Provide computation, analysis, or proper supporting evidences to receive credit. (4 point)

Answer requirement 14 (extra credit: 8 points): Based on part I and Part II analysis, answer following questions:

1. (1) What is your current production lot size setting for products produced? (1 point).

2. (2) Explain and provide rational if your team should produce at the EPQ in future operations (3 points)

3. (3) What are strategies that your team can use to improve production capacity utilization rate in future

   operations? (4 points)

Part III (Extra credit: 12 points): Inventory Management for Round 3

Answer requirement 15: Provide a screenshot of your current inventory using transaction code MD07 with required information marked on the sample screenshot below. (1 point)

Answer requirement 16: Based on financial statement obtained from answer requirement 1, what is the total values of your current inventory that includes both raw material inventory and finished goods inventory. Show computation. (3 points)

Answer requirement 17: Based on screenshot obtained from answer requirements 11, determine the quantity to be finished in month 3 and month 4 for each product produced. Provide computation, analysis, or proper supporting evidences to receive credit. (3 points).