HW04-F10_Key - Key MGMT 361000: HW 04 40 Points (Due:...

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HW04-F10_Key.doc 1 MGMT 361000: HW 04 40 Points (Due: Oct27, 2010) Page numbers given below refer to the print edition of the text, the page number may be slightly different for the e-edition. Show calculations. Question 1: Part A: [6 points- 4, 2] Solve problem 25 from page 255. Note that in part (a) instead of using EOQ approximation we are using EOQ with quantity discounts. In part (b), round off ROP value to 2 decimal places. (a) Lot Size [gallons] 1-399 400-799 >800 C [$/pulley] 2 1.70 2 H [$/pulley/year] 3 3 3 Q 0 2 * * DS H 300 (feasible) 300 (infeasible) 300 (infeasible) Lot Size, Q* 300 400 800 Purchase Cost [$/yr] 2*4500=9000 1.70*4500=7650 1.62*4500=7290 Ordering cost [$/yr] 30*4500/300=450 30*4500/400=337.5 30*4500/800 =168.75 Holding Cost [$/yr] 300/2*3=450 400/2*3=600 800/2*3=1200 Total Annual Costs 9900 8587.5 8658.75 So order quantity is 400 units (b) SL=98.5% Z SL =2.17 So LT =4500/360*4*3/4=37.5 gallon LT =2 √3 ROP= LT + Z 0.985 * LT=37.5 + 2.17* 2√3≈45.60 gallons Part B: [6 points – 3, 3] Solve problem 21 parts “a” and “b” only from page 254. a. Weekly demand ~ N[21, 3.5]. SL = 90%, LT = 2 days. Z 0.90 = 1.29 Demand during lead time ~ N[(2/7) * 21, 3.5 * (2/7)] = N(6, 1.87) ROP = 6 + 1.29 * 1.87 = 8.41 gallons. Average daily demand is 3 gal. This supply ( = ROP ) will last for 8.41 / 3 = 2.8 days. b. Calculate order size Q for OI=10 days and SL=90% OI = 10 days. IP = 8 gallons. OUL = (OI+LT) * + Z SL * { (OI+LT) } * = (10 + 2) * 3 + 1.29 * { (10 + 2) / 7} * 3.5 = 36 + 5.91 42 gallons. Q= OUL – IP = 42 – 8 = 34 gallons. What is the probability of stock-out before this order arrives.
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This note was uploaded on 01/31/2011 for the course MGMT 361 taught by Professor Panwalker during the Fall '10 term at Purdue University-West Lafayette.

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HW04-F10_Key - Key MGMT 361000: HW 04 40 Points (Due:...

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