Spring 2013 Midterm 2 V1 Key.docx - TOM Mid-Term#2 Spring...

TOM Mid-Term #2 Spring, 2013
OEM: Technology/Operations Management
Mid-Term Exam #2 – Spring, 2013 Semester
Version One
Friday, April 12, 2013
Section (circle): 01 02 03 04 05 06
Professor (circle): Licari Erzurumlu
Instructions:
1. You have 120 minutes for this exam.
2. The exam has 12 pages including this cover page and a blank sheet at the end for work
space, as required. Please check to assure that you have all pages.
3. Read all questions carefully before you begin answering.
Please copy in your own handwriting and sign the following pledge below:
“I pledge my honor that I have neither received nor provided unauthorized assistance
during the completion of this work.”
Pledge
ANSWER KEY
Signature Date
1

TOM Mid-Term #2 Spring, 2013
A. Inventory Management – Adapted from Parrot SA of Paris France. (Fictionalized)
(40 Points Total)
Parrot SA based in Paris, France produces an actual flying
drone which is controlled wirelessly by the operator’s cell
phone; the target customers for the drone are hobbyists with
technical interests and skills. The drone comes in two sizes;
both sizes are powered by re-chargeable “high density”
batteries. The two models of the drone utilize the same
battery SKU (stock keeping unit), but the Model One Drone
utilizes one battery per drone; the larger version (the Model
Two) uses two batteries per drone. The rechargeable
batteries have an estimated useful life of one year;
accordingly Parrot anticipates a brisk business for
replacement batteries, since the Drones sold very well in their first two years of availability (2012 and
2013).
The Parrot Drone is manufactured in Paris and the battery
production is outsourced to HDB Corporation based outside of
Tokyo, Japan. HDB charges Parrot $10.00 per battery. The
Inventory Management (IM) Team has determined that batteries
intended for the new systems must be received from Japan one
quarter prior to the Drone requirement, to allow time for Drone
production, packaging and shipment to the retailer channel.
Batteries intended for sale as replacements can be received from
Japan in the same quarter they are sold. The IM team is using the
following data for its planning:
 Lead-time (includes Japan to US shipping) 2 Weeks
 Annual Inventory Holding Cost ($/battery/year) $2.00
 Order Administration Costs ($/order) $260.00
 Shipping costs ($/air shipment) $2,800.00
Parrot’s marketing team forecasts that the demand share between the two Models of Drones will evolve
as follows. The forecast for the total number of Drones to be sold is also forecasted for the product
line. (Assume for our purposes that the forecasts are accurate.)
The Parrot Drone in Flight –
Model One
Parrot’s marketing team has also forecasted the sale of
replacement batteries based on the number of Drones which
Forecas
t
Quarte
r 1,
2014
Quarter
2, 2014
Quarter
3, 2014
Quarter
4, 2014
Quarter
1, 2015
2
HDB’s High Density Battery
for the Parrot Drone
For Grading
Purposes
Points
Available
Actual Points
Earned
Part A. 40
Part B. 24
Part C. 36
Total 100

TOM Mid-Term #2 Spring, 2013
Forecasted
Sales of
Replacement
Batteries
15,500 28,000 36,500 44,000 56,500