Assignment
For the next 6 questions, consider the following situation:
The local Ford dealer is concerned about having the right amount of parts in their service department. One SKU is very expensive, costing the dealer $475. In a typical week, they use 24 of these parts. Their supplier usually gets new orders to the dealer within 3 weeks. Currently they order 6 weeks work of these parts at a time (ie, 144). They use a 12% annual carrying charge rate on all of their inventory.
1. For their current replenishment policy, what is the annual cost of carrying inventory?
2. For their current replenishment policy, what is the total annual incremental inventory cost for this item?
3. Draw a rough graph of how the two competing costs of this inventory policy behave as they try different reorder quantities. Label all components of the graph.
4. What is the EOQ for this item (calculate the number)?
5. If their current policy is not optimal, what type of cost or expense do their need to attempt to improvein order to get to the optimal, and why?
6. Suppose that they want to cut their order quantity down to, say, only 12 units at a time. What would the cost to reorder have to be in order that this new policy be optimal?
For the next three questions, consider the following situation:
Demand data for the last several times that a certain SKU has been ordered is shown below. This is a record of the usage of this part for each week that the order was outstanding. Each part cost $65 and management would like to only run a 8% risk of not having enough stock.
|
Order No.
|
Week 1
|
Week 2
|
Week 3
|
Week 4
|
TOTAL
|
|
1
|
0
|
3
|
2
|
0
|
5
|
|
2
|
2
|
1
|
0
|
0
|
3
|
|
3
|
2
|
3
|
1
|
1
|
7
|
|
4
|
0
|
1
|
2
|
0
|
3
|
|
5
|
1
|
2
|
2
|
1
|
6
|
|
|
|
|
AVERAGE =
|
4.80
|
|
|
|
|
STD DEV =
|
1.79
|
7. What safety stock should they carry?
8. What should be there reorder point?
9. If they now wants to increase the service level he has been using to set the safety stock. This increase will lead to:
a. increasing the risk of a stockout of this item
b. reducing the EOQ for this item
c. increasing the carrying cost of inventory
d. all of these
10. For a "Two Bin System":
a. What is it?
b. What is its primary advantage?
c. Describe how it works
11. Define/explain each of the following:
a. MRP
b. Kanban
c. Andon
12. Define/explain each of the following:
a. Periodic Review
b. SMED
c. Par System
13. The manager of the Atlanta Poppa Joe's Pizzeria has decided to use a Two Bin policy to manage his inventory of dough. His annual demand for dough is about 1800 lbs, averaging 5 lbs a day that he is open. He reorders dough from his supplier in batches of 120 lbs. and the supplier always delivers the order in 3 days. IF he decided to put 85 lbs in Bin 1 (in his kitchen) and to have a safety stock of 20 lbs , how much should he put in bin 2?
14. How do we reduce the need for safety stock?
15. Based on our class discussion, briefly explain the JIT strategy of "lowering the level of the pond".
16. Based on our class discussion, compare and contrast the Driving Philosophies behind the Batch approach to Flow, with those behind the JIT approach with respect to each of the following issues:
a. Economic philosophy
b. Dealing with uncertainties
c. Connecting customers and suppliers within a supply chain
17. Discuss/describe "The Toyota Production System"
18. Nucor recently decided to measure and evaluate the severity of the cracks that are found in the tails of finished slabs as shown below.
To get started, the area supervisor said that his 30 years of experience indicates that when these cracks appear, they are normally about 2.5 cm long. Based on this, Marketing has set guidelines for the severity of cracks. When a crack occurs, an "acceptable" crack is no longer than 4.4 cm and no shorter than 1.0 cm, with a "target" crack of 2.5 cm. Jan South, the Six Sigma AU engineer for the area decided to take samples and quantify the problem. She took samples over several days, each day measuring 3 slabs with cracks. Her results were as follows (in cm): Discuss the capability of the production process to meet Marketing's guidelines on crack severity. Assume that Nucor wants to start monitoring the performance for this issue at only a 2 sigma level.
|
Day
|
Slab 1
|
Slab 2
|
Slab 3
|
|
1
|
4.5
|
4.6
|
1
|
|
2
|
1.4
|
1.1
|
1.8
|
|
3
|
3.8
|
4
|
6.2
|
Attachment:- Assignment.rar