What happens to the restocking level and what is the safety

Question

Question 1. Complete the level production plan using the following information. The only costs you need to consider here are layoff, hiring, and inventory costs. If you complete the plan correctly, your hiring, layoff, and inventory costs should match those given here.

Information	Lay off	Hiring	Inventory
Totals:	25	25	27,690
Costs:	$112,500	$87,500	$166,140
Cost of plan:		$366,140
Planning values
Starting inventory:			1,000
Starting and ending workforce:			227
Hours worked per month per worker:			160
Hours per unit:			20
Hiring cost per worker:			$3,500
Layoff cost per worker:			$4.50
Monthly per-unit holding cost:			$6

MONTH	FORECASTED SALES	SALES IN WORKER HOURS	WORKERS NEEDED TO MEET SALES AVERAGE = 252	ACTUAL WORKERS	ACTUAL PRODUCTION	LAYOFFS	HIRINGS	ENDING INVENTORY
March	1,690
April	1,350
May	1,240
June	1,300
July	1,504
August	1,992
September	2,504
October	2,504
November	3,200
December	3,000
January	2,504
February	2,000

Question 2. Complete the chase production plan, using the following information. The only costs you need to consider here are layoff, hiring, and inventory costs. If you complete the plan correctly, your hiring, layoff, and inventory costs should match those given here.

	LAYOFF	HIRING	INVENTORY
Totals:	250	250	12,000
Costs:	$500,000	$750,000	$72,000
Cost of plan:		$1,322,000
Planning values
Starting inventory:			1,000
Starting and ending workforce: Hours			227
worked per month per worker:			160
Hours per unit:			20
Hiring cost per worker:			$3,000
Layoff cost per worker:			$2,000
Monthly per-unit holding cost:			$6

MONTH	FORECASTED SALES	SALES IN WORKER HOURS	WORKERS NEEDED TO MEET SALES AVERAGE = 252	ACTUAL WORKERS	ACTUAL PRODUCTION	LAYOFFS	HIRINGS	ENDING INVENTORY
March	1,592
April	1,400
May	1,200
June	1,000
July	1,504
August	1,992
September	2,504
October	2,504
November	3,000
December	3,000
January	2,504
February	1,992

Question 3. The manufacturer of TricoFlexers has agreed to offer Pam a price discount of $5 per unit ($45 rather than $50) if she buys 1,500. Assuming that annual demand is still 40,000, how many units should Pam order at a time?

Question 4. Jimmy's Delicatessen sells large tins of Tom Tucker's Toffee. The deli uses a periodic review system, checking inventory levels every 8 days, at which time an order is placed for more tins. Order lead time is 2 days. Average daily demand is 7 tins, so average demand during the reorder period and order lead time (10 days) is 70 tins. The standard deviation of demand during this same 10-day period is 17 tins. Calculate the restocking level. Assume that the desired service level is 95%.

Question 5. For problem 4, suppose that the standard deviation of demand during the 10-day period drops to 4 tins. What happens to the restocking level? Explain why.

Question 6. For Tom Tucker's Toffee in problem 4, draw a saw-tooth diagram similar to the one in Figure 11.3. Assume that the beginning inventory level is equal to the restocking level and that the demand rate is a constant 7 tins per day.

What is the safety stock level?

What is the average inventory level?

Question 7. The lead time for KraftyCity workbenches is 4 weeks, with a standard deviation of 1.5 weeks, and the average weekly demand is 20, with a standard deviation of 7 work-benches. What should the reorder point be if KraftyCity wants to provide a 95% service level?

Question 8.  Now suppose the supplier of workbenches guarantees KraftyCity that the lead time will be a constant 4 weeks with no variability (i.e., standard deviation of lead time = 0). Recalculate the reorder point, using the demand and service level information in problem 7. Is the reorder point higher or lower? Explain why.

Question 9. Consider the following partially completed master schedule record:

On-hand inventory at end of April: 40
Month	May				June
Week	19	20	21	22	23	24	25	26
Forecasted demand	210	210	210	230	225	230	210	210
Booked orders	210	207	209	200	200	187	132	185
Projected ending inventory
Master production schedule	600			675			600
Available to promise							283

a. Complete the projected on-hand inventory calculations and the available-to-promise calculations.

b. Suppose that a customer calls and cancels an order for 50 units in week 25. Which of the following statements are true?

-  The ATP for week 25 will increase by 50 units.

- The projected ending inventory for week 25 will remain the same.

- The ATP for weeks 19 and 22 will be affected.

Question 10. Complete the following MRP record. All gross requirements, beginning inventory levels, and scheduled receipts are shown.

WEEK		1	2	3	4	5	6
***A2***	Gross requirments	300	300	300	200	250	250
LT(weeks) = 2	Scheduled receipts		260
	Projected ending inventory:360
	Net requirements
Min. order = 1	Planned receipts
	Planned orders

Question 11. Now suppose the lead time for item A2, shown in problem 6, is three weeks rather than two weeks. Based on this information, can the company support the current gross requirements for the A2? Why? What are the implications of having reliable supplier and manufacturing lead times in an MRP environment?

Question 12. Republic Tool and Manufacturing Company of Carlsbad, California, make a wide variety of lawn care products. One of Republic's products is the Model Number 540 Broadcast Spreader:

Complete the following MRP records. Note the following:

- Republic intends to start assembling 2,000 broadcast spreader kits in weeks 2, 4, and 6.

- The gross requirements for the gear and rotor plate assembly have already been given to you. For the remaining items, you will need to figure out the gross requirements.

- All scheduled receipts, lead times, and beginning inventory levels are shown.

- Note that cotter pins appear twice in the bill of material.

Gear and rotor plate assembly: Lead time = 1 week; Minimum order quantity = 2500

WEEK	1	2	3	4	5	6
Gross requirments		2,000		2,000		2,000
Scheduled receipts
Projected ending inventory:1000
Net requirements
Planned receipts
Planned orders