HW04_key-Sp10

# HW04_key-Sp10 - Key MGMT36100:HW04 40Points...

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HW04 _key-Sp10.docx Page 1 MGMT 36100: HW 04 40 Points Due: March 24, 2010 Question 1 (9 points, 1+1+2, 1+2+2) Round up ROP / OUL values to the nearest integer. Part (i): Solve problem 20 page 252 except use acceptable stock-out risk as 3% instead of 4% . (a) SL = 97%, Z SL = 1.89. SS = Z SL * σ LT = 1.89 * 52 = 98.286 99 pounds (For Z = 1.88, the service level is much closer to 97%SS 98 pounds). Either answer is OK. (b) ROP = μ LT + Z SL * σ LT = 600 + 98 = 698 pounds. (c) No safety stock means ROP = 600. Z SL = (ROP - μ LT ) / σ LT = (600 – 600) / σ LT = 0 Æ SL = 50% Æ Stock out risk = 50%. Part (ii): Solve problem 26 page 253 except make the following changes in part (c): “If a fixed order interval of eight weeks instead of an ROP” and “it orders 40 boxes when the amount on hand is 12 boxes”. μ = 5 boxes/week or 5*52 = 260 boxes/year, 1 box = 500 sheets, σ = ½ boxes/week, LT = 2 weeks, S = \$2, H = \$0.20 per year per box. (a) EOQ = {2*D*S / H} = {260 * 2 / 0.20 } 72 boxes. (b) Z SL = (ROP - μ LT )/ σ LT = (12 – 10)/(½ * 2) = 2.83 Æ SL = 99.77% Æ Stock out risk = 0.23%. (c) OUL = 40 + 12 = 52 boxes, PP = OI + LT = 8 + 2 = 10 weeks.

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## This note was uploaded on 12/14/2010 for the course MGMT 361 taught by Professor Panwalker during the Spring '10 term at Purdue.

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HW04_key-Sp10 - Key MGMT36100:HW04 40Points...

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