MIT15_762JS11_assn03

# MIT15_762JS11_assn03 - Sloan School of Management...

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Sloan School of Management Professor S. C. Graves Engineering Systems Division Spring 2011 15.762, ESD.267J,1.273J Problem set 3 Due Session 11 There are five questions in this assignment. The first four questions of this assignment are to experiment with the strategic inventory placement model; the last question is based on topics covered in lecture on Session 4. 1. Consider the supply chain shown below: Suppose we are given the following data for this supply chain: production ave demand Inventory lead time demand sigma Value (weeks) (per week) (week) Blade 1 400 4.0 100 20 Blade 2 425 4.5 150 40 Intermediate part 250 2.0 250 45 Cover 2 1.0 250 45 Casting 75 8.0 250 45 Suppose the service time for the customers for blade 1 and blade 2 is set to 0. Assume that you can use the strategic inventory placement (SIP) model (as discussed in class) for this system. That is we model the inventory at each stage by: IN OUT z s Ls σ +−

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where z is a safety factor (say, z = 2), L is the production or procurement lead time for the stage, s IN is the “inbound” service time, namely the service time from the supplier to the stage, and s OUT is the “outbound” service time, namely the service time that the stage quotes to its customers. (If a stage has multiple suppliers we set s IN as the maximum of the service times quoted by the suppliers). Suppose each stage quotes the following outbound service times: Outbound service time (weeks) Blade 1 0 Blade 2 0 Intermediate part 10 Cover 1 Casting 8 a. Determine the safety stock inventory in units and value for each stage (Note: the inbound service times for Cover and for Casting are both zero) b. How does the answer in (a) change if the service times for Blade 1 is 2 weeks and for Blade 2 is 3 weeks? c. Determine the safety stock inventory in units and value for each stage for the following service times: Outbound service time (weeks) Blade 1 0 Blade 2 0 Intermediate part 0 Cover 0 Casting 0
d. Can you do better than either of the solutions in (a) or (c), assuming the blade service times are zero? What happens to the solution in (c) as you increase the service time for the intermediate part (and reduce its inventory)? The next three questions entail using the SIPModel software package. With the SIPModel software application you can build a network model of a supply chain. The software has the capability to determine strategic safety stock levels that minimize the total inventory costs across the supply chain. The software can also determine the costs of an existing system based on its current inventory levels. The following is an overview of how to use the application. There is also a help file with the application. NOTE

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MIT15_762JS11_assn03 - Sloan School of Management...

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