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CHAPTER 12 HOME WORK 2011

1. a. | | Item | Usage | Unit Cost | Usage x Unit Cost | Category | | | 4021 | 90 | $1,400 | $126,000 | A | | | 9402 | 300 | 12 | 3,600 | C | | | 4066 | 30 | 700 | 21,000 | B | | | 6500 | 150 | 20 | 3,000 | C | | | 9280 | 10 | 1,020 | 10,200 | C | | | 4050 | 80 | 140 | 1,120 | C | | | 6850 | 2,000 | 10 | 20,000 | B | | | 3010 | 400 | 20 | 8,000 | C | | | 4400 | 5,000 | 5 | 25,000 | B |

In descending order: | | Item | | Usage x Cost | | Category | | | 4021 | | $126,000 | | A | | | | | | | | | | 4400 | | 25,000 | | B | | | 4066 | | 21,000 | | B | | | 6850 | | 20,000 | | B | | | | | | | | | | 9280 | | 10,200 | | C | | | 3010 | | 8,000 | | C | | | 9402 | | 3,600 | | C | | | 6500 | | 3,000 | | C | | | 4050 | | 1,120 | | C | | | | | 217,920 | | |

1. b. | Category | Percent of Items | Percent of Total Cost | | A | 11.1% | 57.8% | | B | 33.3% | 30.2% | | C | 55.6% | 11.9% |

Solutions (continued)
2. The following table contains figures on the monthly volume and unit costs for a random sample of 16 items for a list of 2,000 inventory items. | | | | | Dollar | | | | Item | Unit Cost | Usage | Usage | Category | | | K34 | 10 | 200 | 2,000 | C | | | K35 | 25 | 600 | 15,000 | A | | | K36 | 36 | 150 | 5,400 | B | | | M10 | 16 | 25 | 400 | C | | | M20 | 20 | 80 | 1,600 | C | | | Z45 | 80 | 250 | 16,000 | A | | | F14 | 20 | 300 | 6,000 | B | | | F95 | 30 | 800 | 24,000 | A | | | F99 | 20 | 60 | 1,200 | C | | | D45 | 10 | 550 | 5,500 | B | | | D48 | 12 | 90 | 1,080 | C | | | D52 | 15 | 110 | 1,650 | C | | | D57 | 40 | 120 | 4,800 | B | | | N08 | 30 | 40 | 1,200 | C | | | P05 | 16 | 500 | 8,000 | B | | | P09 | 10 | 30 | 300 | C |
a. Develop an A-B-C classification for these items. [See table.]
b. How could the manager use this information? To allocate control efforts.
c. Suppose after reviewing your classification scheme, the manager decides to place item P05 into the “A” category. What would some possible explanations be for that decision? It might be important for some reason other than dollar usage, such as cost of a stockout, usage highly correlated to an A item, etc. 3. D = 4,860 bags/yr. S = $10 H = $75 a. b. Q/2 = 36/2 = 18 bags c.

Solutions (continued) d. e. Using S = $5, Q = Increase by [$2,831.79 – $2,700] = $131.79

4. D = 40/day x 260 days/yr. = 10,400 packages S = $60 H = $30 a. b. c. Yes d. TC200 = 3,000 + 3,120 = $6,120 6,120 – 6,118.82 (only $1.18 higher than with EOQ, so 200 is acceptable.) 5. D = 750 pots/mo. x 12 mo./yr. = 9,000 pots/yr. Price = $2/pot S = $20 P = $50 H = ($2)(.30) = $.60/unit/year a. TC = 232.35 + 232.36 = 464.71 If Q = 1500

Solutions (continued) TC = 450 + 120 = $570 Therefore the additional cost of staying with the order size of 1,500 is: $570 – $464.71 = $105.29 b. Only about one half of the storage space would be needed. 6. u = 800/month, so D = 12(800) = 9,600 crates/yr. H = .35P = .35($10) = $3.50/crate per yr. S = $28 a. TC at EOQ: Savings approx. $364.28 per year. 7. H = $2/month S = $55 D1 = 100/month (months 1–6) D2 = 150/month (months 7–12) a. b. The EOQ model requires this. c. Discount of $10/order is equivalent to S – 10 = $45 (revised ordering cost) 1–6 TC74 = $148.32

Solutions (continued) 7–12 TC91 = $181.66 8. D = 27,000 jars/month H = $.18/month S = $60 a. TC= TC4,000 = $765.00 Difference TC4,243 = TC4000 = TC4243 = b. Current: Forto equal 10, Q must be 2,700 Solving, S = $24.30

c. the carrying cost happened to increase rather dramatically from $.18 to approximately $.3705. Solving, H = $.3705 Solutions (continued) 9. p = 5,000 hotdogs/day D= 250/day x 300 days/yr. = 75,000 hotdogs/yr. u = 250 hotdogs/day 300 days per year S = $66 H = $.45/hotdog per yr. a. b. D/Qo = 75,000/4,812 = 15.59, or about 16 runs/yr. c. run length: Qo/p = 4,812/5,000 = .96 days, or approximately 1 day 10. p = 50/ton/day D= 20 tons/day x 200 days/yr. = 4,000 tons/yr. u = 20 tons/day 200 days/yr. S = $100 H = $5/ton per yr. a. b. Average is tons [approx. 3,098 bags] c. Run length = d. Runs per year: e. Q = 258.2 TC = TCorig. = $1,549.00 TCrev. = $ 774.50 Savings would be $774.50

Solutions (continued) 11. S = $300 D = 20,000 (250 x 80 = 20,000) H = $10.00 p = 200/day u = 80/day a. Q0 = (1,095.451) (1.2910) = 1,414 units b. Run length = c. 200 – 80 = 120 units per day d. 848 ÷ 80/day = 10.6 days - 1.0 setup 9.6 days No, because present demand could not be met. e. 1) Try to shorten setup time by .40 days. 2) Increase the run quantity of the new product to allow a longer time between runs. 3) Reduce the run size of the other job.]

f. In order to be able to accommodate a job of 10 days, plus one day for setup, there would need to be an11 day supply at Imax, which would be 880 units on hand. Solving the following for Q, we find: Q = 1,467.

Using formula 12-4 for total cost, we have

TC @ 1,467 units = $8,489.98
TC @ 1,414 units = $8,483.28 Additional cost = $6.70

12. p = 800 units per day d = 300 units per day Q0 = 2000 units per day
a. Number of batches of heating elements per year =batches per year b. The number of units produced in two days = (2 days)(800 units/day) = 1600 units The number of units used in two days = (2 days) (300 units per day) = 600 units Current inventory of the heating unit = 0 Inventory build up after the first two days of production = 1,600 – 600 = 1,000 units Total inventory after the first two days of production = 0 + 1,000 = 1,000 units. Solutions (continued) c. Maximum inventory or Imax can be found using the following equation: d. Production time per batch = Setup time per batch = ½ day Total time per batch = 2.5 + 0.5 = 3 days Since the time of production for the second component is 4 days, total time required for both components is 7 days (3 + 4). Since we have to make 37.5 batches of the heating element per year, we need (37.5 batches) x (7 days) = 262.5 days per year. 262.5 days exceed the number of working days of 250, therefore we can conclude that there is not sufficient time to do the new component (job) between production of batches of heating elements. An alternative approach for part d is: The max inventory of 1,250 will last 1250/300 = 4.17 days 4.17 – .50 day for setup = 3.67 days. Since 3.67 is less than 4 days, there is not enough time.

13. D = 18,000 boxes/yr. S = $96 H = $.60/box per yr. a. Qo =
Since this quantity is feasible in the range 2000 to 4,999, its total cost and the total cost of all lower price breaks (i.e., 5,000 and 10,000) must be compared to see which is lowest.

TC2,400 =
TC5,000 =
TC10,000 =
Solutions (continued) 2,400 5,000 10,000 Quantity
TC

Lowest TC
Hence, the best order quantity would be 5,000 boxes. b. 14. | a. | S = $48 | | | | | D = 25 stones/day x 200 days/yr. = 5,000 stones/yr. | | | | | | | | | | | Quantity | | Unit Price | | a. | H = $2 | | | 1 – 399 | | $10 | | | | | | 400 – 599 | | 9 | | | | | | 600 + | | 8 | | | | | | | TC490 = | 490 | 2 + | 5,000 | 48 + 9 (5,000) = $45,980 | | | 2 | | 490 | | | | | TC600 = | 600 | 2 + | 5,000 | 48 + 8 (5,000) = $41,000 | | | 2 | | 600 | | | 600 is optimum. | | | | b. | 422 447 600
TC
Quantity
H = .30P |

Solutions (continued) | | (Feasible) | | | Compare total costs of the EOQ at $9 and lower curve’s price break: | | TC = | Q | (.30P) + | D | (S) +PD | | | 2 | | Q | | | | | TC422 = | 422 | [.30($9)] + | 5,000 | ($48) + $9(5,000) = $46,139 | | | 2 | | 422 | | | | | TC600 = | 600 | [.30($8)] + | 5,000 | ($48) + $8(5,000) = $41,120 | | | 2 | | 600 | | | Since an order quantity of 600 would have a lower cost than 422, 600 stones is the optimum order size. | | c. | ROP = 25 stones/day (6 days) = 150 stones. |

| | | | | | | | | | 15. | | | Range | | P | | H | | Q | | | D = 4,900 seats/yr. | 0–999 | | $5.00 | | $2.00 | | 495 | | | H = .4P | 1,000–3,999 | | 4.95 | | 1.98 | | 497 NF | | | S = $50 | 4,000–5,999 | | 4.90 | | 1.96 | | 500 NF | | | | 6,000+ | | 4.85 | | 1.94 | | 503 NF |

| | Compare TC495 with TC for all lower price breaks: | | TC495 = | 495 | ($2) + | 4,900 | ($50) + $5.00(4,900) = $25,490 | | | 2 | | 495 | | | TC1,000 = | 1,000 | ($1.98) + | 4,900 | ($50) + $4.95(4,900) = $25,490 | | | 2 | | 1,000 | |

495 497 500 503 1,000 4,000 6,000 Quantity TC | TC4,000 = | 4,000 | ($1.96) + | 4,900 | ($50) + $4.90(4,900) = $27,991 | | | 2 | | 4,000 | | | TC6,000 = | 6,000 | ($1.94) + | 4,900 | ($50) + $4.85(4,900) = $29,626 | | | 2 | | 6,000 | |
Hence, one would be indifferent between 495 or 1,000 units

Solutions (continued) 16. D = (800) x (12) = 9600 units S = $40 H = (25%) x P For Supplier A:

For Supplier B:

Since $132,178 < $133,141.85, choose supplier A.
The optimal order quantity is 500 units.

22. | d = 30 gal./day | | ROP = 170 gal. | | LT = 4 days | ss = ZLT = 50 | | ss = 50 gal. | | Risk = 9% Z = 1.34 | Solving, LT = 37.31 | | 3% Z = 1.88 x 37.31 = 70.14 gal. | | | | 23. D = 85 boards/day ROP = d x + Z d LT ROP = 625 boards 625 = 85 x 6 + Z (85) 1.1 = 6 days Z = 1.23 10.93% LT = 1.1 day .1093 approx. 11% 24. SL 96% Z = 1.75 ROP = + Z = 12 units/day = 4 days = 12 (4) + 1.75 d = 2 units/day LT = 1 day = 48 + 1.75 (12.65) = 48 + 22.14 = 70.14

Solutions (continued) 25. LT = 3 days S = $30 D = 4,500 gal H = $3 360 days/yr. d = 2 gal. Risk = 1.5% Z = 2.17 a. Qty. Unit Price Qo = 1 – 399 $2.00 400 – 799 1.70 800+ 1.62 TC = Q/2 H + D/Q S + PD TC300 = 150 (3) + 15 (30) + 2(4,500) = $9,900 TC400 = 200(3) + 11.25(30) + 1.70(4,500) = $8,587.50* TC800 = 400(3) + 5.625(30) + 1.62(4,500) = $8,658.75 b. ROP = LT + Z = 12.5 (3) + 2.17 (2) = 37.5 + 7.517 = 45.017 gal. 26. d = 5 boxes/wk. d = .5 boxes/wk. LT = 2 wk. S = $2 H = $.20/box a. D = .5 boxes/wk. x 52 wk./yr. = 26 boxes/yr. | b. | ROP = (LT) + z (d) | | | | | | Area under curve to left is .9977, so risk = 1.0000 – .9977 = .0023 |

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Yo This Is Lamborghini Mercy

...It is a weeping, and a moaning, and a gnashing of teeth It is a weeping, and a moaning, and a gnashing of teeth When it comes to my sound which is the champion sound Believe! Believe! [Hook (x4):] Lamborghini Mercy Your chick she so thirsty I’m in that two seat Lambo With your girl she tryna jerk me [Verse 1: Big Sean] Drop it to the floor Make that ass shake Woah make the ground move, that’s an ass quake Built a house up on that ass, that’s an ass state Roll my weed on it, that’s an ass tray Say Ye, say Ye, don’t we do this err’ day-day? I work them long nights, long nights to get a pay day Finally got paid, now I need shade and a vacay And niggas still hatin’, so much hate I need an AK Now we out in Paris, yeah I’m Perrierin’ White girls politicin’ that’s that Sarah Palin Gettin’ high, Californicatin’ I give her that D, cause that’s where I was born and raised in t’s prime time, my top back, this pimp game hoe I’m red leather, this cocaine, I’m Rick James hoe I’m bill droppin’, Ms. Pacman is pill poppin’ ass hoe I’m poppin’ too, these blue dolphins need two coffins All she want is some heel money All she need is some bill money He take his time, he counts it out I weighs it up, that’s real money Check the neck, check the wrist Them heads turnin’, that’s exorcist My Audemar like Mardi Gras That’s Swiss time and that’s excellence Two door preference Roof gone George Jefferson That white frost on that pound cake So your Duncan Heinz is...

Words: 490 - Pages: 2