TOM Mid-Term #2 Spring, 2013 OEM: Technology/Operations Management Mid-Term Exam #2 – Spring, 2013 Semester Version Two Friday, April 12, 2013 Section(circle): 01 02 03 04 05 06 Professor(circle): LicariErzurumlu Instructions: 1.You have 120 minutes for this exam. 2.The exam has 10 pages including this cover page. 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 For Grading Purposes Points Available Actual Points Earned Part A. 40 Part B. 20 Part C. 40 Total 100 1
TOM Mid-Term #2 Spring, 2013 Part A. Inventory Management - (40 Points total) Babson Bears (BB - fictional) is an on-line company which makes a variety of stuffed teddy bears with college logos “tattooed” (embroidered) on the bear’s arm. They produce a very successful line of Bears of varied sizes per a sales forecast, and then hold inventory of the finished bears in stock. These “Make-to-Stock” bears are then shipped directly to customers after receiving their on-line order. BB has also recently introduced a line of bears which allow customers to supply a custom-designed logo that can be embroidered on their desired bear. Given the high level of customization allowed by this new process, the supply chain model is planned as a pull system, i.e. Make-to-Order, which presents new supply chain challenges to the company. To fulfill these on-line custom orders, BB will produce these bears in the same facility as the Make-to-Stock bears and will use all of the same component materials for the operation. All of these materials will continue to be outsourced from the same Asian suppliers. With the start-up of this Make-to-Order business, the BB Materials Director has begun to revise his inventory management plan. The Director is most concerned about the one material that is common to all bears, the synthetic stuffing material used to stuff the bears. The Asian supplier of the stuffing has agreed to produce and transport the stuffing material as one consolidated shipment to BB’s U.S. plant, thus providing BB the economies of scale that it anticipated. The price for the material has been quoted by the Asian supplier at $ .11 per ounce with a lead-time (inclusive of all shipping) of 45 days. Based on recent history of BB’s business, the Director has forecasted total stuffing material for the Make-to-Stock bears, in ounces in Figure 1. In addition, the marketing team has also forecasted the new Make-to-Order business in terms of total bears they believe will be sold in the new custom business. Their forecast is below, in Figure 2.