Exam 2 MSOM Example Problems

6). Bratt's Bed and Breakfast, in a small historic New England town, must decide how to subdiv There are three alternatives: Option A would modernize all baths and combine rooms, leaving Option B would modernize only the second floor; the results would be six suites, four for two t Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms avail Below are the details of profit and demand patterns that will accompany each option. Which o Annual profit under two customer reservation scenarios: Reservations at Capacity Probability A (Modernize all) $90,000 0.5 B (Modernize 2nd) $80,000 0.4 C (Status Quo) $60,000 0.3 B (Modernize 2nd) $74,000 7). Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The qu Percent Defective Probability Winter Park Tech Probability Dayton Enterprises 1 0.7 0.3 3 0.2 0.3 5 0.1 0.4 For example, the probability of getting a batch of tests that are 1% defective from Winter Park Because Kellogg orders 10,000 tests per order, this would mean that there is a .70 probability o A defective Breathalyzer test set can be repaired for $0.50. Although the quality of the test set $ 90.00 $ 123.00 a. Which option should be chosen? b. What is the EMV of that option? Based on evaluating cost, answer the following questions: a. What is the node value for Winter Park? b. What is the node value for Dayton? c. Based on cost, which supplier should Deborah Kellogg select?

lls. , therefore, the profit from the dolls is dependent on the volume of sales. EMV $ 217,750.00 $ 384,000.00 $ 248,000.00 schedule (medium), and the third to do nothing (small). y of .5 (H), .25 (M), .25 (L) of occurring. w demand). 000, $40000, $5000 and the small expansion choice $15000, $15000, $15000. High demand Large Probability 0.5 Large $ 100,000.00 Medium $ 40,000.00 Small $ 15,000.00 large wing on the existing hospital, a small wing, or no wing at all. tal each year. continues to grow. with a large wing and a loss of $45,000 with a small wing. Large Wing EMV Growth Loss Probability 0.4 0.6 , what is the EM on is expected monetary value, which decision should Suit make?

mpetitive product. product, Weiss’s expected profit is $40,000; if Weiss adds an assembly line and ATR follows roduce a competitive product, of $100,000. competitive not competitive EMV probability 0.4 0.6 add new line $ 10,000.00 $ 40,000.00 $ 28,000.00 add plant addition $ (100,000.00) $ 600,000.00 $ 320,000.00 ng machine (it cuts compound angles on the ends of large structural pipes used in the fabrication yard). . xpand its capacity. fit he expects each one to yield over a two-year period. k up "soon" (within 3 to 6 months) and a 70% probability that the improvement will come "later" (in 9 to 12 State of nature Probability (later) EMV 210,000 $ 86,000.00 160,000 $ 85,500.00 -5,000 $ (18,500.00) 70% $ 86,000.00 $ 85,500.00 $ (18,500.00) s to purchase a model XPO2 drilling machine from Jeff’s store. r Jeff to get a model XPO2 in stock.

$ 9,000.00 $ 13,000.00 ndition without surgery. years 1 2 5 8 10 15 20 No surgery 60% 20% 10% 10% Surgery 45% 0% 20% 0% 13% 8% 5%

today tomorrow 2 days 3 days $ 30,000.00 $ 55,000.00 $ 70,000.00 $ - 0.6 0.3 0 $ 30,000.00 $ 33,000.00 $ 21,000.00 $ -

Probabilty 0.3 0.5 If the probabilities associated with the states of nature are .30 for a large crowd, .5 $2,750 $5,450 $3,200 Stock Average Inventorty Alternative 2 has a fixed cost of $3,800.00 and a variable cost of $0.75 The number of units that are planned to be produced in a favorable market are 20 The probability of a favorable market is 65%. Based on cost, which alternative should be chosen and what is the total cost? Group of answer choices alternative 1; 23,100 based on probability, alternative 1 at $14,850 alternative 2; $16,831 alternative 2; 18,800 alternative 1; $20,195 a. What is the EMV for Large? b. What is the EMV for Average? c. What is the EMV for Small? d. What decision should be made? 6). Alternative 1 has a fixed cost of $1,100.00 and a variable cost of $1.10;

EMV $ 25,000.00

1). Chris Suit is administrator for Lowell Hospital. She is trying to determine whether If the population of Lowell continues to grow, a large wing could return $150,000 to t a. What is the EMV for building a Large Wing$ $ b. What is the EMV for the Small Wing option? $ c. What is the EMV if the hospital chooses no wing at all? $ 2). A plant manager wants to know, based on investing in market research, what is ov Currently there are two alternatives facing his decision - (expand or subcontract work Under favorable market conditions the manager would make $75,000 for the expans Under unfavorable market conditions the expansion would lose $50,000 and by subc If the two states of nature are equally likely to occur, answer the following questions 3). A concessionaire for the local ballpark has developed a table of conditional numb For the Large inventory the cost per unit is $0.25. For Average inventory the cost per Alternatives (in units) State of Nature (large crowd) State of Nature (average crowd) Large Inventory 1,500 1,275 Average Inventory 1,275 945 Small Inventory 550 425 probability 0.3 0.5 If the probabilities associated with the states of nature are .30 for a large crowd, .50 Based on Cost, determine the following: $ 7,671.88 $ 6,344.50 $ 6,945.43 population continues to grow. If the population of Lowell remains the same, the hos Probabilities: there is a .35 chance of growth and a .65 chance the population will rem d. What choice, based on EMV, should Chris make? a. What is the EMV for expanding? b. What is the EMV for subcontracting? c. What decision should be made based on the overall profit/loss? a. What is the EMV for Large? b. What is the EMV for Average? c. What is the EMV for Small?

Average Inventory d. What decision should be made?

to build a large wing on the existing hospital, a small wing, or no wing at all. the hospital each year. If a small wing were built, it would return $60,000 to the hospital each year if the $ (2,750.00) $ (8,250.00) $ - no wing verall payout would be. k out). sion and $5,000 utilizing subcontracting as an option. contracting make $3,500. For each alternative the cost of the research is $2,500 s: $ 10,000.00 $ 1,750.00 expansion er of units for the various alternatives (stocking decisions) and the states of nature (size of crowd) r unit is $0.45. for Small inventory the cost per unit is $3.23. State of Nature (small crowd) Fixed Cost for Warehouse storageVC 1,000 $7,350 $ 0.25 775 $5,890 $ 0.45 350 $5,500 $ 3.23 0.2 for an average crowd, and .20 for a small crowd. TOTAL COSTS large crowd average crowd small crowd Large Inventory $ 7,725.00 $ 7,668.75 $ 7,600.00 Average Inventory $ 6,463.75 $ 6,315.25 $ 6,238.75 Small Inventory $ 7,276.50 $ 6,872.75 $ 6,630.50 probability 0.3 0.5 0.2 spital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. main the same.

growth constant EVM prob 0.35 0.65 no $ - $ - $ - small $ 60,000.00 $(45,000.00) $ (8,250.00) large $ 150,000.00 $(85,000.00) $ (2,750.00) favorable unfavorable EVM expansion $ 75,000.00 $ (50,000.00) $ 10,000.00 subcontract $ 5,000.00 $ 3,500.00 $ 1,750.00 prob 0.5 0.5 research $ 2,500.00 EMV $ 7,671.88 $ 6,344.50 $ 6,945.43

1). Southeast Soda Pop, Inc., has a new fruit drink for which it has high hopes. Joh Q1 1,800, Q2 1,100, Q3 1,600, Q4 900 COSTS/OTHER DATA Previous quarter’s output = 1,300 cases Beginning inventory = 50 cases Back-Order cost = $150 per case per quarter Inventory holding cost = $40 per case at end of quarter Hiring employees = $40 per case Terminating employees = $80 per case Subcontracting cost = $60 per case Unit cost on regular time = $30 per case Overtime cost = $15 extra per case ($45) John’s job is to develop an aggregate plan. The three initial options he wants to Include any costs due to the change in the production level from the previous o (your subcontractor only has the capacity to fill a maximum of 300 units per qu Demand Q0 1300 Q1 1800 Q2 1100 Q3 1600 Q4 900 Subtotal 5400 Unit cost Subtotal cost a. Plan A: a strategy that hires and fires personnel as necessary to produce the What was the total inventory holding cost? b. Plan B: a level strategy, producing an average demand rate. Include any cost Was there a need to back-order units? c. Plan C: a level strategy that produces 1,200 cases per quarter and meets the d. Which strategy is the lowest-cost plan?

2). Eagle Fabrication has the following aggregate demand requirements and other Quarter Demand 1 1300 2 1400 3 1500 4 1300 What is the cost of the following plans: a. Plan A—chase the current period's demand by using hiring and layoffs to pro Demand Q0 1500 Q1 1300 Q2 1400 Q3 1500 Q4 1300 Subtotal 5500 Unit cost Subtotal cost 3). Deb Bishop Health and Beauty Products has developed a new shampoo, and yo The cost accounting department has supplied you the costs relevant to the agg All are shown as follows: Q1 1,400, Q2 1,200, Q3 1,500. Q4 1,300 Costs: Previous Quarters Output 1,500 units Beginning Inventory 100 units Stock-out $50 per unit Inventory Holding Costs $10 per unit Hiring Workers $40 per unit b. Plan B—produce at a constant rate of 1200 and obtain the remainder from o c. What plan would you choose?

Layoff Workers $80 per unit Unit Cost $30 per unit Overtime Cost $15 extra per unit ($45) Subcontracting $60 per unit Your job is to develop an aggregate plan for the next four quarters. a. Plan A - Hire or fire to produce exactly the prior quarter's demand. What is t c. Plan C - Utilize a mixed strategy, first produce at a level production rate of 90 Demand Q0 1500 Q1 1400 Q2 1200 Q3 1500 Q4 1300 Subtotal 5400 Unit cost Subtotal cost 4). Holding cost $8/toolbox/month Subcontract $80/toolbox Regular time $45/toolbox OT Regular time cost plus additional $20 per toolbox Capacity increase $50/unit Capacity decrease $90/unit Backlog cost $10/toolbox/month June capacity and demand 500 toolboxes Beginning inventory 0 toolboxes How much was spent on hiring? b. Plan B - Adopt a level strategy at a production rate of 1,150 units per quarte What were the total lost sales, including the cost? d. Which is the more economical plan for Deb Bishop Health and Beauty Produ You are developing an aggregate plan for a toolbox maker which sells to profes

Demand June 500 July 400 August 500 September 500 October 700 November 800 December 700 Subtotal 3600 Unit cost Subtotal cost 5). Mary Rhodes, operations manager at Northeast Furniture, received the followi Jan: 1,000; Feb. 1,200; March 1,400; April 1,800; May 1,800; June 1,600 Plan A: Try a level strategy where the company produces to the average dema What is the total cost of this plan? What is the total holding (inventory) cost for this plan? Plan B: In this plan, the toolbox maker would to the minimum demand of the 6 What is the total cost of this plan? What is the total holding (inventory) cost for this plan? Which plan should the toolbox maker choose? Assume stockout costs for lost sales of $100 per unit, inventory carrying costs o Alternative 1: Produce at a steady rate, equal to minimum requirements, of 1,0 What is the cost of alternative 1? What is the total holding (inventory) cost? Alternative 2: Vary the workforce to match monthly demand. The current wor

Demand December January 1000 February 1200 March 1400 April 1800 May 1800 June 1600 Subtotal 8800 Unit cost Subtotal cost 6). The following forecast constitutes the demand for relay switches. John Smith, Quarter Forecast 1 1800 2 1100 3 1600 4 900 Costs/Other Data: Previous quarter’s output = 1300 cases Beginning inventory = 350 cases Stock-out cost = $110 per case Inventory holding cost = $30 per case at the end of quarter Hiring employees = $40 per case Terminating employees = $75 per case Subcontracting cost = $60 per case Unit cost on regular time = $30 per case Overtime cost = $20 extra per case What is the total cost of alternative 2? How many units are produced via regular time production? Which alternative has lower incremental cost (cost per unit; they are producin

John’s job is to develop an aggregate plan. The three initial options he wants to Plan A: a strategy that hires and fires personnel to have monthly production m Plan B: a level strategy, producing the average forecast by regular time produc Plan C: a level strategy that produces 1,200 cases per quarter and meets the fo Demand Q0 1300 Q1 1800 Q2 1100 Q3 1600 Q4 900 Subtotal 5400 Unit cost Subtotal cost 7). Below are the aggregate demand requirements and other data for the upcomi Quarter Demand 1 1200 2 1400 3 1650 4 1300 Which of the following production plans is better: a. What is the cost of plan A? b. What is the cost of plan B? c. What is the cost of plan C? d. If you are John’s boss, the VP for operations, which plan do you implement? a. Plan A—chase demand by hiring and layoffs to exactly meet monthly deman b. Plan B—Mixed Strategy - produce at a constant rate of 1250 and obtain the c. What plan should be implemented?

Demand Q0 1550 Q1 1200 Q2 1400 Q3 1650 Q4 1300 Subtotal 5550 Unit cost Subtotal cost 8). The following is an aggregate plan. The following are the requirements and oth Previous quarter's output is 2250. Beginning inventory is 550 units. The organiz Given that policy, if the item is not in stock, then the company will incur an ave If the organization needs to hire workers (each worker provides 4 units of capa Regular time production is $125.00 per unit, Overtime is $63.00 extra. If the co The subcontractor that the organization utilizes costs $215.00 per unit, with ha Demand M0 2250 a. Produce utilizing a chase strategy by producing the demand or each month b b. How many units did you decrease (layoff) during the 6-month planning perio c. Produce utilizing a chase strategy based on the prior month's demand. What d. Did the company incur any lost sales? If so, how many and and what was the e. Produce using a level production strategy at 2,550, what is the overall cost o f. Was there a need to hold inventory? If so how many units and what was the g. Produce based on a mixed strategy, with a level production rate of the minim h. What was the total cost of overtime plus subcontracting? i. What is the most cost effective plan?

M1 3300 M2 2700 M3 2550 M4 2010 M5 2950 M6 3400 Subtotal 16910 Unit cost Subtotal cost Demand M0 2250 M1 3300 M2 2700 M3 2550 M4 2010 M5 2950 M6 3400 Subtotal 16910 Unit cost Subtotal cost

hn Mittenthal, the production planner, has assembled the following demand forecast: Q0 Q1 Q2 Q3 Q4 Subtotal Unit cost Subtotal cost o evaluate are: output level. Total cost = $ $ 322,000.00 $ 8,000.00 $ 308,500.00 YES uarter). Include any costs due to the change in the production level from the previous output level. Total Cos Plan C Plan B Output Overtime Inventory Subcontracting Hire 1300 50 1350 50 1350 1350 1350 50 5400 0 50 0 50 $ 30.00 $ 15.00 $ 40.00 $ 60.00 $ 40.00 $ 162,000.00 $ - $ 2,000.00 $ - $ 2,000.00 e current period's forecast. ts due to the change in the production level from the previous output level. Cost = $ If so, how many units and what wa e forecast demand with inventory and subcontracting

r data for the upcoming four quarters. Previous quarter's output 1500 units Beginning inventory 200 units Stock-out cost $50 per unit Inventory holding cost $10 per unit at end of quarter Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit Overtime $10 extra per unit ($40) oduce at a level that exactly matches demand. Include any costs due to the change in the production level fr Plan B Plan A Output Inventory Hire Layoff Total 1500 200 1300 200 200 1400 200 100 1500 200 100 1300 200 200 5500 800 200 400 $ 30.00 $ 10.00 $ 4.00 $ 8.00 $ 165,000.00 $ 8,000.00 $ 800.00 $ 3,200.00 $ 177,000.00 ou need to develop its aggregate schedule. gregate plan, and the marketing department has provided a four-quarter forecast. Plan A Demand Output Inventory Q0 1500 1500 100 Q1 1400 1500 200 Q2 1200 1400 400 Q3 1500 1200 100 overtime. Include any costs due to the change in the production level from the previous output level. Cost =

Q4 1300 1500 300 Subtotal 5400 5600 1000 Unit cost $ 30.00 $ 10.00 Subtotal cost $ 168,000.00 $ 10,000.00 the cost of this plan? $ $ 214,000.00 $ 12,000.00 $ 201,000.00 700 UNITS $ 35,000.00 00 per quarter, then utilizing overtime with a cap of 200 units, then subcontracting. What is the cost of this p Plan B Plan B Output Inventory Hire Layoff Stock-out 1500 100 1150 350 150 1150 50 1150 350 1150 150 4600 0 0 350 700 $ 30.00 $ 10.00 $ 40.00 $ 80.00 $ 50.00 $ 138,000.00 $ - $ - $ 28,000.00 $ 35,000.00 Month Demand July 400 August 500 September 500 October 700 November 800 December 700 er where one holds the employment steady. What is the cost of this plan? $ ucts? ssional mechanics. The relevant cost and demand data are shown below:

$ 177,400.00 $ 10,400.00 $ 213,000.00 $ - Plan A Plan A Output Inventory Hire Layoff Total 500 600 200 100 600 300 600 400 600 300 600 100 600 0 3600 1300 100 0 $ 45.00 $ 8.00 $ 50.00 $ 90.00 $ 162,000.00 $ 10,400.00 $ 5,000.00 $ - $ 177,400.00 ing demand forecast: $ 168,000.00 $ - and (of July-December) by allowing capacity increases (hiring) and decreases(firing) to occur. 6 month planning period, then use subcontracting each month to meet that month's demand, ensuring that of $25 per unit per month and zero beginning and ending inventory. Evaluate the following two plans on an 000 units per month. Subcontract enough additional units, at $60 per unit premium cost, to avoid lost sales rkforce most recently produced 1,300 units last month. The cost of hiring workers is $3,000 per 100 units of

$ 54,000.00 8800 Alternative 2 Alternative 1 Output Inventory Subcontract Stock-out Total 1000 1000 1000 200 1000 400 1000 800 1000 800 1000 600 6000 0 2800 0 $ - $ 25.00 $ 60.00 $ 100.00 $ - $ - $ 168,000.00 $ - $ 168,000.00 the production planner, has assembled the following cost data and the quarterly demand forecast: Plan A Demand Output Hire Q0 1300 1300 Q1 1800 1800 500 Q2 1100 1100 Q3 1600 1600 500 Q4 900 900 Subtotal 5400 5400 1000 Unit cost $ 30.00 $ 40.00 Subtotal cost $ 162,000.00 $ 40,000.00 units ng 8,800 units)?

o evaluate are: meet the forecast. ction each month. orecast demand with inventory and subcontracting. $ 349,000.00 $ 196,000.00 $ 196,500.00 Plan B Plan B Output Hire Layoff Inventory Stock-out 1300 350 1350 50 100 1350 250 1350 0 1350 450 5400 50 0 700 100 $ 30.00 $ 40.00 $ 75.00 $ 30.00 $ 110.00 $ 162,000.00 $ 2,000.00 $ - $ 21,000.00 $ 11,000.00 ing four quarters. Previous quarter's output 1550 units Beginning inventory 150 units Stockout cost $50 per unit Inventory holding cost $10 per unit at end of quarter Hiring workers $8 per unit Laying off workers $12 per unit Unit cost $40 per unit Overtime $15 extra per unit $ 240,000.00 $ 228,100.00 Plan B nd via regular time production. What is the total cost? remainder from overtime. What is the total cost?

Plan A Output Hire Layoff Inventory Total 1550 150 1200 350 150 1400 200 150 1650 250 150 1300 350 150 5550 450 700 600 $ 40.00 $ 8.00 $ 12.00 $ 10.00 $ 222,000.00 $ 3,600.00 $ 8,400.00 $ 6,000.00 $ 240,000.00 her data for the upcoming 6 months. Demand levels are: M1 3300, M2 2700, M3 2550, M4 2010, M5 2950, M zations policy is not to backorder. erage lost sales cost of $257.50. Inventory holding cost is $55.65. acity) the cost will be $480 per every 4 units (or worker), and laying off workers will be $720 per every worke ompany decided to work O.T. then, based on internal cost and safety goals will only be able to utilize 300 un aving a capacity level of being able to provide up to 400 units per month. $ 2,822,395.00 1290 UNITS $ 232,200.00 $ 2,761,893.50 600 UNITS $ 154,500.00 $ 2,259,292.00 680 UNITS $ 37,842.00 $ 675,450.00 Level Strategy 1 Chase Strategy 1 Output Inventory Hire Layoff Total 2250 550 by varying the workforce. What is the overall cost of the plan? od, and what was the cost? t is the overall cost? e cost? of the plan? e cost? mum demand period, then utilize Overtime, then subcontracting (do not forget OT and subcontracting capa

3300 550 1050 2700 550 600 2550 550 150 2010 550 540 2950 550 940 3400 550 450 16910 3300 2440 1290 $ 125.00 $ 55.65 $ 120.00 $ 180.00 $ 2,113,750.00 $ 183,645.00 $ 292,800.00 $ 232,200.00 $ 2,822,395.00 Level Strategy 1 Output Inventory Hire Layoff Stock-out 2250 550 2550 300 200 2550 150 2550 2550 540 2550 140 2550 710 15300 680 300 0 1060 $ 125.00 $ 55.65 $ 120.00 $ 180.00 $ 257.50 $ 1,912,500.00 $ 37,842.00 $ 36,000.00 $ - $ 272,950.00

Plan A Demand Output Overtime Inventory Subcontracting Hire 1300 1300 50 1800 1800 50 500 1100 1100 50 1600 1600 50 500 900 900 50 5400 5400 0 200 0 1000 $ 30.00 $ 15.00 $ 40.00 $ 60.00 $ 40.00 $ 162,000.00 $ - $ 8,000.00 $ - $ 40,000.00 950 $ 142,500.00 st = $ $ 257,500.00 MAX Layoff Back-Order Total Demand Output Q0 1300 1300 400 Q1 1800 1200 150 Q2 1100 1200 400 Q3 1600 1200 Q4 900 1200 0 950 Subtotal 5400 4800 $ 80.00 $ 150.00 Unit cost $ 30.00 $ - $ 142,500.00 $ 308,500.00 Subtotal cost $ 144,000.00 as the total back-ordering cost?

rom the previous output level. Cost = $ $ 177,000.00 $ 167,400.00 Plan B Demand Output Overtime Inventory Stockout Q0 1500 1500 200 Q1 1300 1200 100 Q2 1400 1200 100 Q3 1500 1200 300 Q4 1300 1200 100 Subtotal 5500 4800 500 100 0 Unit cost $ 30.00 $ 40.00 $ 10.00 $ 50.00 Subtotal cost $ 144,000.00 $ 20,000.00 $ 1,000.00 $ - Hire Layoff Stockout Total 100 200 =

300 300 300 0 $ 40.00 $ 80.00 $ 50.00 $ 12,000.00 $ 24,000.00 $ - $ 214,000.00 plan? $ $ 246,000.00 Plan B Total MAX Demand Output Inventory Hire Q0 1500 1500 100 Q1 1400 900 Q2 1200 900 Q3 1500 900 Q4 1300 900 Subtotal 5400 3600 0 0 $ 201,000.00 Unit cost $ 30.00 $ 10.00 $ 40.00 Subtotal cost $ 108,000.00 $ - $ -

Plan B Demand Output Inventory Hire Layoff June 500 500 July 400 400 100 August 500 400 September 500 400 October 700 400 November 800 400 December 700 400 Subtotal 3600 2400 0 0 100 Unit cost $ 45.00 $ 8.00 $ 50.00 $ 90.00 Subtotal cost $ 108,000.00 $ - $ - $ 9,000.00 there is no backlog. n incremental cost basis: s. f capacity increase, while firing is $6,000 per 100 units of capacity decrease.

Alternative 2 Demand Output Inventory Subcontract Stock-out December 1300 January 1000 1000 February 1200 1200 March 1400 1400 April 1800 1800 May 1800 1800 June 1600 1600 Subtotal 8800 8800 0 0 0 Unit cost $ - $ 25.00 $ 60.00 $ 100.00 Subtotal cost $ - $ - $ - $ - Layoff Inventory Total 350 350 700 350 350 700 350 1400 1400 $ 75.00 $ 30.00 $ 105,000.00 $ 42,000.00 $ 349,000.00

Plan C Total Demand Output Hire Layoff Q0 1300 1300 Q1 1800 1200 100 Q2 1100 1200 Q3 1600 1200 Q4 900 1200 Subtotal 5400 4800 0 100 Unit cost $ 30.00 $ 40.00 $ 75.00 $ 196,000.00 Subtotal cost $ 144,000.00 $ - $ 7,500.00

Plan B Demand Output Hire Layoff Inventory Q0 1550 1550 150 Q1 1200 1250 300 200 Q2 1400 1250 50 Q3 1650 1250 Q4 1300 1250 Subtotal 5550 5000 0 300 250 Unit cost $ 40.00 $ 8.00 $ 12.00 $ 10.00 Subtotal cost $ 200,000.00 $ - $ 3,600.00 $ 2,500.00 M6 3400 er (or 4 units). nits per month. $ 2,475,925.00 Chase Strategy 2 Demand Output Inventory Hire Layoff M0 2250 2250 550 acity limits), what is the total cost of this plan?

M1 3300 2250 M2 2700 3300 600 1050 M3 2550 2700 750 600 M4 2010 2550 1290 150 M5 2950 2010 350 540 M6 3400 2950 940 Subtotal 16910 15760 2990 1990 1290 Unit cost $ 125.00 $ 55.65 $ 120.00 $ 180.00 Subtotal cost $ 1,970,000.00 $ 166,393.50 $ 238,800.00 $ 232,200.00 Mixed Strategy 1 Total MAX Demand Output Inventory Hire M0 2250 2250 550 M1 3300 2010 M2 2700 2010 M3 2550 2010 M4 2010 2010 M5 2950 2010 M6 3400 2010 Subtotal 16910 12060 0 0 $ 2,259,292.00 Unit cost $ 125.00 $ 55.65 $ 120.00 Subtotal cost $ 1,507,500.00 $ - $ -

Layoff Back-Order Total 700 700 1400 0 $ 80.00 $ 150.00 $ 112,000.00 $ - $ 322,000.00 Plan C 300 Overtime Inventory Subcontracting Hire Layoff Back-Order 50 300 100 250 150 300 100 200 0 200 750 0 100 350 $ 15.00 $ 40.00 $ 60.00 $ 40.00 $ 80.00 $ 150.00 $ - $ 8,000.00 $ 45,000.00 $ - $ 8,000.00 $ 52,500.00

Hire Layoff Total 300 0 300 $ 4.00 $ 8.00 $ - $ 2,400.00 $ 167,400.00

200 Layoff Overtime Subcontracting Stock-out Total 600 200 200 200 100 200 400 200 200 600 800 900 0 $ 80.00 $ 45.00 $ 60.00 $ 50.00 $ 48,000.00 $ 36,000.00 $ 54,000.00 $ - $ 246,000.00

Subcontracting Total 100 100 300 400 300 1200 $ 80.00 $ 96,000.00 $ 213,000.00

Hiring Layoff Total 300 200 200 400 200 800 500 $ 30.00 $ 60.00 $ 24,000.00 $ 30,000.00 $ 54,000.00

Inventory Subcontracting Total 350 250 100 300 300 400 550 $ 30.00 $ 60.00 $ 12,000.00 $ 33,000.00 $ 196,500.00

Overtime Total 350 50 400 $ 55.00 $ 22,000.00 $ 228,100.00 Stock-out Total

500 100 600 $ 257.50 $ 154,500.00 $ 2,761,893.50 300 400 Layoff Overtime Subcontracting Stock-out Total 240 300 400 40 300 390 300 240 300 400 240 300 400 690 240 1500 1830 970 $ 180.00 $ 188.00 $ 215.00 $ 257.50 $ 43,200.00 $ 282,000.00 $ 393,450.00 $ 249,775.00 $ 2,475,925.00

Total $ 257,500.00

1). The objective of aggregate planning is to meet forecast demand while ________ over the minimizing fixed cost all of these. maximizing service level minimizing stock out minimizing cost 2). Which of the following aggregate planning strategies is a capacity option? influencing demand by extending lead times influencing demand by changing price changing inventory levels ounterseasonal product mixing influencing demand by back ordering 3). Dependence on an external source of supply is found in which of the following aggregate arying production rates through overtime or idle time subcontracting using part-time workers hiring and laying off back ordering during high demand periods 4). Which choice best describes level scheduling? Price points are calculated to match demand to capacity. Inventory goes up or down to buffer the difference between demand and production. Overtime is used to handle seasonal demand fluctuations. Subcontracting, hiring, and layoffs manipulate supply. Daily production is variable from period to period. 5). Demand in the next period is estimated at 800, and demand over the next six periods (its Which of the following tactics would be most representative of following a chase strategy implement a lower price point to increase demand add 100 units to inventory in the next period A firm uses the chase strategy of aggregate planning. It produced 1000 units in the last pe

add 200 units to inventory in the next period lay off workers to match the 200-unit difference hire workers to match the 100-unit difference 6). In a level strategy, what is kept uniform from month to month? [Blank1] inventory levels demand levels sub-contracting levels production/workforce levels product mix 7). Quarter Demand Previous quarter's output 1500 units 1 1300 Beginning inventory 200 units 2 1400 Stockout cost $ 50.00 per unit 3 1500 Inventory holding cost $ 10.00 per unit at the 4 1300 Hiring workers $ 4.00 per unit Laying off workers $ 8.00 per unit Unit cost $ 30.00 per unit Overtime $ 10.00 extra per unit By utilizing the aggregate planning excel sheet, answer the following: Plan B Plan B Demand Output Overtime Inventory Stockout Q0 1500 1500 200 Q1 1300 1200 100 Q2 1400 1200 100 Q3 1500 1200 300 Q4 1300 1200 100 Subtotal 5500 4800 500 100 0 Unit cost $ 30.00 $ 40.00 $ 10.00 $ 50.00 Subtotal cost $ 144,000.00 $ 20,000.00 $ 1,000.00 $ - ABC Manufacturing has the following Aggregate Plan demand requirements and other da a. Plan A - Chase demand and produce the exact amount of demand each quarter by hirin b. Plan B - Mixed strategy producing at a constant rate of 1200 and obtaining the remaind c. Based on cost, what plan should be chosen?

e planning period. e planning strategies? s aggregate planning horizon) is estimated to average 900 units. y? [Blank1] 1000 units eriod.

800 200 Demand Output Overtime Q0 1500 1500 Q1 1300 1300 Q2 1400 1400 Q3 1500 1500 e end of the quarter Q4 1300 1300 Subtotal 5500 5500 0 Unit cost $ 30.00 $ 10.00 Subtotal cost $ 165,000.00 $ - $ 177,000.00 $ 167,400.00 Hire Layoff Total 300 0 300 $ 4.00 $ 8.00 $ - $ 2,400.00 $ 167,400.00 ata for the upcoming four quarters. ng and laying off. What is the total cost of the plan? der needed from Overtime. What is the cost of this plan?

Plan A Inventory Stockout Hire Layoff Total 200 200 200 200 100 200 100 200 200 800 0 200 400 $ 10.00 $ 50.00 $ 4.00 $ 8.00 $ 8,000.00 $ - $ 800.00 $ 3,200.00 $ 177,000.00

1). Osprey Machine Works has the following demand requirements and other data for the upc Quarter Demand Previous quarter's output 2500 units 1 2300 Beginning inventory 200 units 2 2400 Stock-out (back-order) cost$50 per unit 3 2600 Inventory holding cost $10 per unit at end of quarter 4 2100 Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit Overtime $10 extra per unit Subcontracting $60 per unit Determine the cost for the following aggregate planning strategies: a. Plan A - Vary the workforce using a chase strategy by hiring and layoffs to match regular b. Plan B - utilize a level strategy @ 2,200 for the planning period, with the option of using Plan B 2). The following is an aggregate plan. The following are the requirements and other data for t Months Forecast Previous quarter's output 800 units 1 Beginning inventory 0 units 2 Backorder cost $100 per unit 3 1200 Inventory holding cost $30 per unit at end of quarter 4 Hiring workers $20 per unit 5 800 Laying off workers $40 per unit 6 1000 Subcontracting cost $200 per unit Unit cost $100 per unit c. Plan C - utilize a level strategy at the minimum demand level of the planning period, then d. Which plan would you choose 700 900 600 a. Produce utilizing a chase demand by varying the workforce based on prior demand. Wha b. Did you backorder any sales in the prior month calculation. If so, how many? c. How many units did you decrease (layoff) during the 6-month planning period, and what

$ 300,000.00 Level d. Produce utilizing a chase strategy based on the current month. What is the overall cost e. Using a level production strategy based on 850 units per month, what is the overall cost f. Based on a mixed strategy, with a level production rate of 600, then utilizing subcontracti g. What was the total cost of subcontracting h. What plan should you adopt, based on cost?

coming four quarters. Plan A Demand Output Inventory Hire Layoff Q0 2500 200 Q1 2300 2300 200 200 Q2 2400 2400 200 100 Q3 2600 2600 200 200 Q4 2100 2100 200 500 Subtotal 9400 9400 800 300 700 Unit Cost $ 30.00 $ 10.00 $ 4.00 $ 8.00 Subtotal Cost $ - $ 282,000.00 $ 8,000.00 $ 1,200.00 $ 5,600.00 r time production to monthly demand. What is the total cost of this strategy? $ $ 296,800.00 overtime and inventory levels if needed. What is the total cost of this plan? $ $ 288,400.00 the upcoming 6 months. Demand Output M0 800 800 M1 700 800 M2 900 700 M3 1200 900 M4 600 1200 M5 800 600 M6 1000 800 $ 621,000.00 Subtotal 5200 5000 Unit Cost $ 100.00 700 Subtotal Cost $ - $ 500,000.00 700 $ 28,000.00 n using subcontracting and inventory levels when needed. What is the total cost of this plan? at is the overall cost of the plan t was the cost

Demand $ 566,000.00 M0 M1 700 $ 555,000.00 M2 900 M3 1200 $ 708,000.00 M4 600 M5 800 M6 1000 Subtotal 5200 Unit Cost Subtotal Cos $ - of the plan ting with a cap of 300 – what is the total cost of this plan

Plan B Total Demand Output Inventory Overtime Q0 2500 200 Q1 2300 2200 100 Q2 2400 2200 100 Q3 2600 2200 400 Q4 2100 2200 100 Subtotal 9400 8800 200 500 Unit Cost $ 30.00 $ 10.00 $ 40.00 $ 296,800.00 Subtotal Cost $ - $ 264,000.00 $ 2,000.00 $ 20,000.00 Plan C Demand Output Inventory Subcontracting Q0 2500 200 Q1 2300 2100 Q2 2400 2100 300 $ 303,200.00 Q3 2600 2100 500 Q4 2100 2100 Subtotal 9400 8400 0 800 Unit Cost $ 30.00 $ 10.00 $ 60.00 Subtotal Cost $ - $ 252,000.00 $ - $ 48,000.00 Chase Hire Layoff Inventory Back-order Total 0 M0 100 M1 100 100 M2 200 400 M3 300 200 M4 600 0 M5 200 200 M6 700 700 300 700 Subtotal $ 20.00 $ 40.00 $ 30.00 $ 100.00 Unit Cost $ 14,000.00 $ 28,000.00 $ 9,000.00 $ 70,000.00 $ 621,000.00 Subtotal Cost Level

Output Hire Layoff Inventory Back-order Total 800 0 850 50 150 850 100 850 250 850 0 850 50 850 100 5100 50 0 300 350 $ 100.00 $ 20.00 $ 40.00 $ 30.00 $ 100.00 $ 510,000.00 $ 1,000.00 $ - $ 9,000.00 $ 35,000.00 $ 555,000.00

Hire Layoff Total 300 0 300 $ 4.00 $ 8.00 $ - $ 2,400.00 $ 288,400.00 Hire Layoff Total 400 0 400 $ 4.00 $ 8.00 $ - $ 3,200.00 $ 303,200.00 Chase 2 Demand Output Hire Layoff Inventory Back-order Total 800 800 0 700 700 100 900 900 200 1200 1200 300 600 600 600 800 800 200 1000 1000 200 5200 5200 900 700 0 0 $ 100.00 $ 20.00 $ 40.00 $ 30.00 $ 100.00 $ - $ 520,000.00 $ 18,000.00 $ 28,000.00 $ - $ - $ 566,000.00 Mixed

CAP 300 Period Demand Output Hire Layoff Inventory Subcontracting M0 800 0 M1 700 600 200 100 M2 900 600 300 M3 1200 600 300 M4 600 600 300 M5 800 600 200 M6 1000 600 300 Subtotal 5200 3600 0 200 0 1500 Unit Cost $ 100.00 $ 20.00 $ 40.00 $ 30.00 $ 200.00 Subtotal Cos $ - $ 360,000.00 $ - $ 8,000.00 $ - $ 300,000.00

Back-order Total 300 100 400 $ 100.00 $ 40,000.00 $ 708,000.00

1). M. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates One of the components has an annual demand of 250 units, and this is constant throughou 2.5 100 50 e. Suppose that the ordering (setup) cost is not $20, and Cotteleer has been ordering 150 u determine what the ordering (setup) cost would have to be. $ $ 45.00 D annual demand 250 H carrying cost $ 1.00 S setup cost $ 20.00 OT operation time 250 Q* Optimum order quantity 100 D/Q* # of orders 2.5 OT/(D/Q*) Days in between orders 100 Q*/2 Average Inventory 50 ??? 2). Race One Motors is an Indonesian car manufacturer. At its largest facility, in Jakarta, the co The daily demand for the subcomponent is 45 units. The company operates 265 day per y Ordering costs are $30 per order. Lead time for orders is 4 days. 335 35.60 $ 1,067.86 180 e. What if Race One decided order 400 units as their ordering quantity, what would the ne Daily demand 45 D annual demand 11925 unit cost $ 127.50 Carrying cost is estimated to be $1 per unit per year, and the ordering (setup) cost is $20 p a. To minimize cost, how many units should be ordered each time an order is placed? b. How many orders per year are needed with the optimal policy? c. How many days in between orders d. What is the average inventory if costs are minimized? a. What is the economic ordering quantity? b. How many orders need to be processed per year? c. What is the cost of managing the inventory? d. What is the ROP?

holding costs 5% H carrying cost $ 6.375 S setup cost $ 30.00 OT operation time 265 LT Lead time for orders 4 Q* Optimum order quantity 335.015364002 D/Q* # of orders 35.5953824253 Q*/(2H) Cost of managing inventory $ 1,067.86 Daily D*LT ROP 180 3). Joe Henry’s machine shop uses 2,500 brackets during the course of a year. These brackets Holding cost per bracket per year: 10% Order cost per order: $ 18.75 Lead time: (days) 2 Working days per year: 250 Unit cost $ 15.00 125 $ 187.50 10 d. Given the EOQ, what is the total annual cost of managing the inventory? $ 25 20 4). The catering manager of La Vista Hotel, Lisa Ferguson, is disturbed by the amount of silver Last Friday night, when her crew tried to set up for a banquet for 500 people, they did not She decides she needs to order some more silverware, but wants to take advantage of any For a small order (2,000 or fewer pieces), her vendor quotes a price of $1.80/piece. If she o 5,001–10,000 pieces brings the price to $1.40/piece, and 10,001 and above reduces the pr Lisa’s order costs are $200 per order, her annual holding costs are 5%, and the monthly de a. Given the above information, what would be the economic order quantity (EOQ)? b. Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost? $ c. Given the EOQ, how many orders would be made each year? e. What is the time between orders? days f. What is the reorder point (ROP)?

16970.56 b. What is the annual holding cost at the optimal quantity? $ $ 530.33 c. What is the total annual cost, including ordering, holding, and purchasing the silverware Demand monthly 3750 demand monthly*12 Demand [D] 45000 Holding % 5% Order Costs [S] $ 200.00 (H*Q)/2 Annual Holding Cost $ 530.33 D*unit cost Total Product Cost $ 56,250.00 (D*S)/Q Total order cost $ 530.33 annual holding cost + total product cost + total order cost Total Cost $ 57,310.66 5). Joe's Camera shop has a favorite model that has monthly sales of 12. The cost to place an Assume the store is open 350 days per year. Lead time is 10 days. Cost per unit is $12.50 18.97 7.6 46.12 d. What is the annual holding cost? $ $ 189.74 e. What is the total cost, including the cost of the units? $ 2179.47 monthly sales 12 yearly sales [D] 144 holding costs [H] $ 20.00 Order costs [S] $ 25.00 operation time per yr 350 lead time 10 unit cost $ 12.50 6). Consider a product with a daily demand of 150 units, a setup cost of $100, and a holding co 1464 a. What is the optimal order quantity given the discount levels? a. What is the optimal order size? b. What is the optimal number of orders per year? c. What is the optimal number of days between orders? The firm operates and experiences demand 275 days per year. a. What is the Economic Order Quantity?

732 28 d. What are the total holding costs? $ $ 2,817.91 e. What if the company decided to order 1,100 units instead of the EOQ, what is the order Daily demand 150 yearly sales [D] 41250 holding costs % 11% holding costs [H] $ 3.85 Setup costs [S] $ 100.00 operation time per yr 275 lead time 10 unit cost $ 35.00 7). ABC Inc. orders components for distribution at a monthly demand of 900 units. Holding co The company operates 240 days per year 267.90 20.16 d. What are the total cost of managing the inventory? $ $ 1,908.82 $ 258,408.82 Monthly demand 900 yearly sales [D] 10800 holding costs % 15% holding costs [H] $ 3.56 Ordering costs [S] $ 47.35 operation time per yr 240 unit cost $ 23.75 b. What is the average inventory on hand? c. What are the number of orders per year? a. If the company wishes to effectively procure these components, what would be the opti b.. What is the average inventory? c. How many order cycles are there per year? e. What is the total cost, including the cost of the inventory? f. What is ABC Inc. decided to order 600 components, what impact would it have on holdin

8). The cost of each unit is 10.95. The purchasing director of the university estimates the orde 23.14 c. What is the total cost of managing the inventory? $ $ 2,082.35 10.81 320 f. What is the total cost, including the cost of the cartridges? $ $ 221,082.35 Daily demand 80 yearly sales [D] 20000 holding costs % 22% holding costs [H] $ 2.41 Ordering costs [S] $ 45.00 operation time per yr 250 unit cost $ 10.95 Lead time 4 9). The annual demand for an item is 10,000 units. The cost to process an order is $75 and the Quantity Price 1 to 9 $2.95 per unit 10 - 999 $2.50 per unit 1,000 - 4,999 $2.30 per unit 5,000 or more $1.85 per unit b. What price should the firm pay per unit? $ $ 1.85 c. What is the total annual cost at the optimal behavior? $ $ 19,575.00 d. What is the holding cost based on the optimal behavior? $ $ 925.00 Central University has a demand level of 80 units per day, for a particular toner cartridge i cost of 22%. Operating days are 250. The lead time is for orders to arrive is four days. a. To minimize the total annual cost of purchasing and carrying how many toner cartridges b. What are the numbers of orders that need to be placed? d. What are the number of days in between orders? e. What is the re-order point? a. What is the optimal order quantity, given the following price breaks for purchasing the i

Demand [D] 10000 Setup cost [S] $ 75.00 holding cost % 20% 10). Groundz Coffee Shop uses 4 pounds of a specialty tea weekly; each pound costs $16. Carry Assume the basic EOQ model. Assume 52 weeks per year. 8 b. What is total annual cost (including item cost) of managing the shop? $ $ 3,744.00 weekly demand 4 unit cost $ 16.00 Carrying costs [H] $ 52.00 cost to prepare order [S] $ 8.00 weeks per yr 52 Demand [D] 208 EOQ [Q*] 8 Avg inventory 4 # orders per yr 26 Total cost of managing inventory $ 416.00 Total purchase cost $ 3,328.00 Total cost $ 3,744.00 # of days between orders 12 Operating days 312 11). Annual holding costs are $5.75 per case. The internal expense per/pie is $2.59. Assume 25 a. How many pounds should Groundz order at a time? c. In pursuing lowest annual total cost, how many orders should Groundz place annually? d. How many days will there be between orders (assume 312 operating days) if Groundz pr Kroger's orders Louisiana Specialty Foods famous meat pies at a rate of 350 cases a month

234.06 117.03 17.94 $ 12,223.83 monthly demand 350 unit cost $ 2.59 holding costs [H] $ 5.75 order cost [S] $ 37.50 Demand [D] 4200 operation time per yr 250 lead time 3 EOQ [Q*] 234.056849282 Avg inventory 117.028424641 # orders per yr 17.9443584449 Total cost of managing inventory $ 1,345.83 Total purchase cost $ 10,878.00 Total cost $ 12,223.83 New Q 190 New total ordering costs $ 828.95 OG total ordering costs $ 672.91 Change in ordering costs $ 156.03 12). Ashlee recently joined Bimbo Bakeries USA as VP Purchasing, and decided to go out on bid The item can be purchased from either Yeast & Brewery Company, or Crust n Krumbs Com Ordering cost is $25.23, and annual holding cost per unit is $13.95 (fixed amount), these ar Yeast & Brewery Company Crust n Krumbs C Quantity Unit Price Quantity 1-399 $16.91 1-499 400-899 $16.23 500-999 900+ $15.69 1000+ a. Determine the EOQ b. What is the average inventory? c. Determine the number of orders per year d. Determine total cost of managing the inventory (setup plus holding) per year e. What is the total cost, including the cost of the pies? f. What if Kroger's decided to reduce the ordering of the pies to 190 cases very time they p What is the Economic Order Quantity (EOQ) if price is not a consideration, round to whole Which supplier, based on all options with regard to discounts, should be used?

900 monthly demand 1300 holding costs [H] $ 13.95 order cost [S] $ 25.23 Demand [D] 15600 EOQ [Q*] 237.546599843 Quantity Unit Price Yeast & Brewery Company 1-399 $16.91 400-899 $16.23 900+ $15.69 Quantity Unit Price Crust N Crumbs Company 1-499 $16.23 500-999 $15.91 1000+ $15.69 What is the optimal order quantity? What is the total annual cost of ordering, inventory holding, and purchasing the strategic in If the quality of Crust n Krumbs turns out to be superior, which vendor would you select? What would be the extra cost for the superior quality in choosing Crust n Krumbs, round to The % cost increase in choosing Crust n Krumbs over Yeast & Brewery? By compared to the Ashlee learned that the actual usage has gone up to 3,000 lbs. per month, what would be t

microprocessors into refrigerators and other home appliances. ut the year. 100 units each time an order is placed. For this order policy (of Q = 150) to be optimal, units D per unit per yr H per order S days per yr OT Q* Q*^2 Q*^2 / 2*D ompany stocks sub-components and it them uses these sub-components as part of thei year. Holding costs are 5%. Unit cost of the sub-component is $127.5. ew holding cost be? $ $ 1,275.00 units New Q* units new H per order. The company operates 250 days per year.

per unit per yr per order days per yr days are purchased from a supplier 90 miles away. The following information is known abou D H S Q* Avg Inventory Annual inventory holding 250 # orders per yr Annual order cost Annual cost of managing Inventory Time between orders D per day ROP $ 375.00 rware she is losing every week. have enough knives. y quantity discounts her vendor will offer. orders 2,001–5,000 pieces, the price drops to $1.60/piece. rice to $1.25. emand is 3750 pieces. For the best option:

e? $ $ 57,310.66 Options: <=2000 pieces 2001-5000 pieces 5001-10000 pieces >=10001 pieces order to replenish inventory is $25 per order, and annual inventory holding cost per uni order size [Q*] units optimal # of orders per yr per unit # of days between orders per order Annual holding cost days Total order cost days Total product cost per unit Total cost ost per unit of 11% of the $35.00 product cost.

ring cost? $ $ 3,750.00 units order size [Q*] units Avg inventory per unit # orders per yr Total holding costs per order New Q* days Ordering Cost days per unit osts are 15% of the unit cost of $23.75. The ordering cost is $47.35. 535.81 $ 114.34 increase in holding costs units order size [Q*] units Avg inventory per unit # orders per yr Total cost of managing the inventory per order Total purchase cost days Total cost per unit New Q New total Holding costs OG total Holding costs Change in holding costs tional amount to order? ng costs?

ering cost at $45 and thinks that the university can hold this type of inventory at an annu 864.41 units order size [Q*] units # orders per yr per unit Avg inventory Total cost of managing the inventory per order # of days between orders days Reorder point [ROP] per unit Total cost of managing inventory days Total purchase cost Total cost e annual inventory holding cost is 20% of item cost. 5000 options in the student computer labs each year. s should be ordered? item?

units 1 to 9 10 - 999 1,000 - 4,999 5,000 or more 5000 ying costs are $52. It costs the firm $8 to prepare an order. 26 12 Q/2 D/Q (average inventory*H) + (orders per yr*S) D*unit cost total cost of managing the inventory + total purchase cost operation time/# of orders 50 days per year. Lead time is 3 days. ractices EOQ behavior? h. The order cost, which includes transportation is $37.50.

$ 1,345.83 days days Q/2 D/Q (average inventory*H) + (orders per yr*S) D*unit cost total cost of managing the inventory + total purchase cost (D*S)/ NEW Q (D*S)/ OG Q new total order costs - OG total ordering costs d for a strategic ingredient. Expected demand is 1,300 lbs. per month. mpany. Their price lists are shown in the table. re internal costs to Bimbo. Inventory Model used annual demand for calculation. Company Unit Price $16.23 $15.91 $15.69 238 Yeast & Brewery Company placed an order, what impact would if have on ordering costs? e number? Units

$251,479 Crust N Crumbs Company $654 *EOQ ADJUSTMENTS BASED UPON MINIMUM QUANTITY - EOQ CANN EOQ Adjusted EOQ Total Product Cost 238 238 $263,796.00 238 400 $253,188.00 238 900 $244,764.00 EOQ Adjusted EOQ 238 238 $253,188.00 238 500 $248,196.00 238 1000 $244,764.00 unit price*D ngredient, round to whole number? o whole number? e total cost (ordering, holding & purchasing) from the two suppliers, then calculate the % the incremental cost annually in choosing Crust n Krumbs. By compared to the total cos

annual demand 250 units carrying cost $ 1.00 per unit per yr setup cost $ 45.00 per order operation time 250 days per yr Optimum order quantity 150 22500 SETUP COST 45 ir process. EOQ 400 units holding/carrying cost $ 1,275.00 (Q*/2)*unit cost*holding %

ut the brackets: 2500 $ 1.50 holding%*unit cost $ 18.75 250 sqrt((2*D*S)/H) 125 Q*/2 $ 187.50 Avg inventory*H 10 D/Q* $ 187.50 S*# orders per yr $ 375.00 annual order cost + annual inventory holding 25 Work days/# orders per yr 10 D/work days 20 D per day*lead time

*CHOOSE HIGHEST Q** unit cost or price Holding costs [H] Q* $ 1.80 $ 0.09 14142.135624 $ 1.60 $ 0.08 15000 $ 1.40 $ 0.07 16035.674515 $ 1.25 $ 0.06 16970.562748 holding%*unit cost it is $20. 18.9736659610103 7.58946638440411 D/Q 46.1165492107889 operation time/# of orders $ 189.74 (Q*H)/2 $ 1,800.00 D*unit cost $ 189.74 (D*S)/Q $ 2,179.47 annual holding cost + total product cost + total order cost

1463.8501094228 731.9250547114 Q/2 28.1791146063889 D/Q $ 2,817.91 (Q*H)/2 1100 units $ 3,750.00 (D*S)/New Q 535.808292503755 267.904146251878 Q/2 20.1564629571766 D/Q $ 1,908.82 (average inventory*H) + (orders per yr*S) $ 256,500.00 D*unit cost $ 258,408.82 total cost of managing the inventory + total purchase cost 600 $ 1,068.75 (new Q/2)*H $ 954.41 OG Q/2)*H $ 114.34 new total holding costs - OG total holding costs

ual storage 864.406158858196 23.137271518771 D/Q 432.203079429098 Q/2 $ 2,082.35 (average inventory*H) + (orders per yr*S) 10.8050769857274 operation time/# of orders 320 D per day*lead time $ 1,179.64 (average inventory*H) + (orders per yr*S) $ 219,000.00 D*unit cost $ 221,082.35 total cost of managing the inventory + total purchase cost *EOQ adjusted to minimum quantity of 5000* unit cost (per unit) Holding cost [H] EOQ [Q*] Adjusted EOQ

$ 2.95 $ 0.59 1594.4820104 $ 2.50 $ 0.50 1732.0508076 $ 2.30 $ 0.46 1805.7877963 $ 1.85 $ 0.37 2013.4681656 5000 Total order cost $ 18,500.00 D*unit cost Total product cost $ 150.00 (D*S)/Q Total Holding Cost $ 925.00 (Q*H)/2 Total cost $ 19,575.00 annual holding cost + total product cost + total order cost

ordering would increase by $ 156.03

0.26% 597 NOT BE LESS THAN MINIMUM QUANTITY* Total order cost Total Holding Cost Total Cost $ 1,656.89 $ 1,656.89 $267,109.78 $ 983.97 $ 2,790.00 $256,961.97 $ 437.32 $ 6,277.50 $251,478.82 $ 1,656.89 $ 1,656.89 $256,501.78 $ 787.18 $ 3,487.50 $252,470.68 $ 393.59 $ 6,975.00 $252,132.59 (D*S)/EOQ (Q*H)/2 total product cost + total order cost + total holding cost % on the premium paid for the superior quality. st (ordering, holding & purchasing) from the two suppliers, based on 3,000 lbs. per month demand.

*change cell E349 to 3000 for answer instead of $654*

1). Most inventory models attempt to minimize: total inventory-based costs. the number of items ordered. the number of orders placed. the safety stock. the likelihood of a stockout. 2). What is the primary purpose of the basic economic order quantity model shown below? [B Q* = sqrt(2*D*S)/H to minimize the sum of setup cost and holding cost to calculate the reorder point, so that replenishments take place at the proper time to maximize the customer service level to minimize the sum of carrying cost and holding cost to calculate the optimum safety stock 3). A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of What is the approximate economic order quantity (EOQ)? [Blank1] 600 unit cost $ 1,000.00 110 holding % 25% 183 H holding cost $ 250.00 70 D Annual demand 10000 16 S order cost $ 150.00 Q* EOQ 109.54451 4). The assumptions of the EOQ model are met in a situation where monthly demand is 300 un The firm operates 250 days per year. Lead time is 5 days. What is the re-order point for this 72 monthly demand 300 5 S setup cost $ 50.00 250 H holding cost $ 12.00 109 operating time 250 22 lead time 5 Daily demand $ 14.40 Reorder point $ 72.00

5). An economic order quantity problem has a daily production rate = 50. The company operat What is the EOQ for this problem? 330 daily production rate 50 99 operation time 225 222 S setup cost $ 46.00 118 carrying % 20% 73 unit cost $ 47.50 H carrying cost $ 9.50 D Annual demand 11250 Q* EOQ 330.07176 6). When quantity discounts are allowed, the cost-minimizing order quantity: is always an EOQ quantity. minimizes the sum of holding, ordering, and product costs. minimizes the unit purchase price. may be a quantity below that at which one qualifies for that price. minimizes the sum of holding and ordering costs. 7). The annual demand, ordering cost, and the annual inventory carrying cost rate for a certain Price is established by the following quantity discount schedule. What should the order qua Quantity 1 to 49 50 to 249 250 and up Price (per unit) $ 5.00 $ 4.50 $ 4.10 *Q = sqrt(2*D*S)/H and TC = (D/Q)*S + (Q/2)*H + D*C (cost) Answer the following: 126.4911064 N/A 133.3333333 2880 139.6860592 $ 2,661.75 Based on utilizing the formulas associated with the Quantity Discount Model - a. For range 1 to 49, what is the EOQ and the total cost? b. For range 50 to 249, what is the EOQ and the total cost? c. For range 250 and up, what is the EOQ and the total cost?

Blank 1] f the item. Annual demand is 10,000 units, and the order cost is $150 per order. units per order 110 nits, setup cost is $50, holding cost is $12 per unit per year. s model? [Blank1] units per unit per yr days per yr days

tes 225 days per year. Set-up cost are $46. Carrying cost are 20% of the $47.50 unit cost days/yr n item are: D = 600 units, S = $20/order, and I = 30% (holding) of item price. antity be in order to minimize the total annual cost? D 600 units 1 to 49 50 to 249 250+ S $ 20.00 per order H $ 1.50 $ 1.35 $ 1.23 carrying % 30% 1 to 49 50 to 249 250+ (D/Q)*S $ 94.87 $ 90.00 $ 85.91 (Q/2)*H $ 94.87 $ 90.00 $ 85.91 250 D*C $ 3,000.00 $ 2,700.00 $ 2,460.00 1 to 49 50 to 249 250+ EOQ 126.4911 133.33333 139.68606 TC N/A 2880 N/A TC 1 TO 49 Q* > 49 (exceeds top end range) Annual ordering cost $ 12,000.00 $ 48.00 Annual carrying cost $ 307.50 $ 153.75 Annual Unit cost $ 2,460.00 Annual TC $ 2,661.75

1). George Heinrich uses 1,500 per year of a certain sub-assembly that has an ann Each order placed costs George $150. He operates 300 days per year and has f For this sub-assembly, find: 100 b. Cost to manage the inventory $ $ 4,500.00 15 20 30 Demand [D] 1500 Holding cost [H] $ 45.00 Ordering Costs [S] $ 150.00 Operating Time 300 days Lead in time 6 days 2). Larry LaForge Products offers the following discount schedule for its 4-by-8-foo Order Unit Cost 9 sheets or less $18.00 10 to 50 sheets $17.50 More than 50 sheets $17.25 Home Sweet Home Company orders plywood from LaForge. Home Sweet Hom 50 51 c. What is the cost of the optimal number $ $ 1,901.21 Demand [D] 100 sheets Holding cost % 20% a. Economic order quantity c. Number of orders per year d. Number of days in between orders e. Re-Order Point f. What if George decides to order 120 sub-assemblies every time he places an a. What is the EOQ b. What is the optimal number of sheets of plywood to order?

Ordering Costs [S] $ 45.00 Total order cost $ 1,725.00 D*unit cost Total product cost $ 88.11 (D*S)/Q Total Holding Cost $ 88.11 (Q*H)/2 Total cost $ 1,901.21 annual holding cost + t

ual holding cost of $45 per unit. ound that an order must be placed with his supplier 6 working days before he can expect to receive that $ 2,700.00 EOQ 100 SQRT((2*D*S)/H) # of orders per yr 15 D/Q Avg inventory 50 Q/2 Cost of managing inventory $ 4,500.00 (average inventory*H) + (orders per yr*S) # of days between orders 20 operation time/# of orders [D] per day 5 D/operating time Reorder point [ROP] 30 D per day*lead time New Q 120 New Holding costs $ 2,700.00 (new Q/2)*H New Ordering costs $ 1,875.00 (D*S)/ new Q ot sheets of quality plywood. me has an ordering cost of $45. Carrying cost is 20%, and annual demand is 100 sheets. What do you recom unit cost holding cost [H] EOQ 9 sheets or less $18.00 $3.60 50 10 to 50 sheets $17.50 $3.50 50.709255 n order. What are the holding costs? , and the ordering costs?

More than 50 sheets $17.25 $3.45 51.075392 total product cost + total order cost

order. $ 1,875.00 mmend?

Q 1: Given the project within the table below, calculate the following: a. What is the critical path Activity Duration (hoursImmediate Predecessors C,D,E,F,G A 4 - and it's length B 3 - 24 C 10 - b. How much slack does activity A have? D 7 B,C 15 E 1 D c. How much slack does activity B have? F 1 E 7 G 5 A,F d. How much slack does activity G have? 0 17 and the late finish 18 Q 2: Sue Smith is developing a six-sigma quality certification program for managers. Smith has listed a number of activities that must be completed before a certification of this nature could be conduct The activities, immediate predecessors, and times appear in the accompanying table: a. What is the critical path? Activity Predecessor Time (Days) C,D,E,F,G A - 2 b. What is the total project completion time? B - 5 25 days C - 1 c. How much slack is there in activity E.? D C 10 9 days E A,B 3 d. What is the ES/EF and LS/LF for activity E? F D 6 5 and 8 14 and 17 G E,F 8 26 days, B-E-G e. For activity E, what is the late start e. What if activity B. was delayed by 10 days, what would be the project length and critical path?

Q 3: The following information is provided for the tasks on a project. Times are in days. BEFH b. The time to complete this project will be 60 c. The slack for task G is 12 d. What is the late start / late finish for task G? 38 43 e. If 3 days are added to task A , how long will the project take to complete and what activities are on the critical pat 62 days: A-C-E-F-H Q 4: Assume that the activity times are independent. Activity Immediate Predeces Time (Weeks) a. What is the expected completion time of the critical path? 42 weeks. A — 12 b. How much slack is there in activity D.? B — 9 1 weeks. C A 5 a. The critical path is The estimated times and immediate predecessors for the activities in a project at George Kyparis’s retinal scanning c

c. What is the Late Start Late Finish for activity B.? D A, B 4 4 13 E C, D 8 d. How much slack is there in activity B.? F E 10 4 weeks. G F 7 e. What if activity D. was delayed by 3 weeks, what would be the project length and critical path? 44 weeks; A,D,E,F,G Q 5: Given the following task time estimates (HOURS), a. How long is the project length? Task Time Predecessor 132 A 40 b. What tasks form the critical path? B 20 A,C,E,F,G C 25 A D 19 A, B 46 65 E 25 C, D d. How much slack is there in activity C? F 24 E 0 G 18 F How much slack in activity D? 6 hrs e. What if activity D. was delayed by 7 hours, what would be the project length and critical path? 132 hrs; A,C,D,E,F,G ???? Why not 133 f. Referring to letter e., how much slack would be in activity B.? 20 hrs Q 6: c. What is the LS/LF for activity D.?

The critical path on a project has 4 tasks, A, B, C, and D. The allowable amounts of crashing and the costs for crashing are given as times A should be crashed by 2 30 2 2 days 3 50 1 B should be crashed by 1 25 1 1 days 2 15 2 C should be crashed by t.c: 1 days CRASHING SEQUENCE ( start w/ lowest cost) D should be crashed by 1 D 2 days 2 D The order of crashing these will be 3 C DDCAAB 4 A The total cost of crashing by 6 days will be 5 A 165 6 B total days Q 7: a. The following information is provided for crashing analysis. The project will take days to complete. b. In what order would you crash the activities to crash the project by 3 days? c. What is the additional cost to do this crashing? d. After crashing, the project will be completed in days To crash the project by 6 days, Task #days allowed $$$/day A B C D Task N A B C D E

Q 9: Given the following task time estimates (days)

Task Time Predecesso B,E,F,H,I A 19 -- b. What is the project length? B 12 -- 93 ???? C 9 c. How much slack in task B.? D 12 A 79 E 20 B, C d. How much slack is in task A.? F 14 D, E 1 day G 28 D e. What is the early start / early finish for task F.? H 15 F 32 46 I 18 G, H f. What is the late start / late finish for task G.? 33 61 g. What if task A increased by 2 days. What would be the project length and the critical path? ???? Check diagram Q a. What is the critical path?

ted.

th? Task Time Predecessor A 12 --- B 21 --- C 8 A D 6 C E 7 B, C F 15 E G 5 D H 17 F, G company are given in the following table.

cost 60 50 25 30 165 NT CT Normal cost Crash cost Imm. Pred. 8 6 1400 1600 -- 5 5 500 500 -- 3 2 800 850 A 4 3 1100 1300 B 6 5 900 1150 C,D

or

Q 1: Which of the following statements regarding CPM is TRUE? B) The critical path is that set of activities that has positive slack. C) Some networks have no critical path. D) All activities on the critical path have their LS equal to the maximum EF of all immediate predecessors. E) All activities on the critical path have their ES equal to their LF. Q 2: A simple CPM network has three activities, D, E, and F. D is an immediate predecessor of E and of F. E is an imme The activity durations are D=4, E=3, F=6. A) The critical path is D-E-F, duration 12. B) The critical path is D-F, duration 10. C) Slack at D is 0 periods. D) Slack at E is 3 periods. E) Both A and C are true. Q 3: Activity D on a CPM network has predecessors B and C, and has successor F. D has duration 6. B's earliest finish i A) B is a critical activity. (no bc/ it has slack) B) C is completed before B. (no look at diagram) C) D has no slack but is not critic (it is critical bc/ 0 slack) D) D is critical, and has a slack of two days. (slack is 0) E) F is critical, and has zero slack. A) The critical path is the shortest of all paths through the network.

Q 4: The critical path for the network activities shown below is A-D-E with duration 19 Activity Duration Immediate Predecessors A 10 - B 8 - C 2 A D 4 A E 5 B, C, D Q 5: A network consists of the activities in the following list. Times are given in weeks. By drawing the network diagram, what is the late start / late finish for activity B? a. 0 weeks, 3 weeks b. 5 weeks, 8 weeks c. 8 weeks, 11 weeks d. 2 weeks, 5 weeks e. 7 weeks, 10 weeks

Q 6: Which of the following statements regarding time-cost tradeoffs in CPM networks is FALSE? A) Crashing shortens project duration by assigning more resources to critical tasks. B) Crashing sometimes has the reverse result of lengthening the project duration. C) Crashing must consider the impact of crashing an activity on all paths in the network. D) Activities not on the critical path can become critical after crashing takes place. E) A negative crash cost per period would imply that either crashing is cheaper than not crashing or that the cras Q 7: A network has been crashed to the point where all activities are critical. Additional crashing: A) is unnecessary. B) is impossible. C) is prohibitively expensive. D) may require crashing multiple tasks simultaneously. E) can be done, but all critical tasks must be reduced in duration Q 8: Two activities on different critical paths that share no common nodes are candidates for crashing on a CPM net Activity details are in the table below. To cut one day from the project's duration, the manager should crash activity(ies) ________, adding ________ to A) B; $2,000 Activity Normal TimNormal CosCrash TimeCrash Cost B) C; $2,000 B 4 $6,000 3 $8,000 C) C; $1,000 C 6 $4,000 4 $6,000 D) B & C; $3,000 E) B & C; $4,000 Q 9: Two critical path activities are candidates for crashing on a CPM network. Activity details are in the table below. To cut one day from the project's duration, activity ________ should be crashed first, adding ________ to projec

C; $6,000 Activity Normal TimNormal CosCrash TimeCrash Cost B; $2,000 B 4 $6,000 3 $8,000 C; $1,000 C 6 4,000 4 6,000 B; $8,000 C; $2,000

ediate predecessor of F. is 18, while C's is 20. F's late start is 26. Which of the following is definitely TRUE?

sh time was slower than the normal time. ???????? o project cost. (crash-normal) TTL CC: ttl allowable crash ti cc/day $2,000 1 $2,000 $2,000 2 $1,000 (choose lowest cost) ct cost.

TTL CC: ttl allowable crash ti cc/day $2,000 1 $2,000 $2,000 2 $1,000