Copia

CHAPTER 12MANAGING INVENTORY 543 SOLUTION Here the demand is constant and lead time is variable, with data given in weeks, not days. We apply Equation (12-16): ,;. ROP where ULT = (Weekly demand x Average lead time in weeks) + Z (Weekly demand) ULT = standard deviation of lead time in weeks = 2 So, with Z = 1.28, for a 90% service level: x 6) + 1.28(60)(2) 360 + 153.6 = 513.6 == 514 surgery packs ROP = (60 Problems Note: Px means the problem may be solved with POM for Windows OM. .................................................................................................. .......... ,and/or ........Excel .............................. , ......... , ........ , .. . ' Jean-Marie Bourjolly's restaurant has the following inventory items that it orders on a weekly basis: "12.1 INVENTORY ITEM $ VAlUEICASE L Houts Plastics' Charlotte Inventory Levels ITEM CODE # # ORDERED/WEEK AVERAGE INVENTORY (UNITS) VALUE (S/UNIT) 1289 400 3.75 Ribeye steak 135 3 2347 300 4.00 Lobster tail 245 3 2349 120 2.50 23 12 2363 75 1.50 3 2 2394 60 1.75 Napkins 12 2 Tomato sauce 23 11 French fries 43 32 3 3 Garlic powder 11 3 Trash can liners 12 3 Pasta Salt Pepper 32 5 Fish filets 143 10 Prime rib roasts 166 6 28 2 Tabl ecloths Oil Lettuce (case) 35 24 Chickens 75 14 Order pads 12 2 Eggs (case) 22 7 2395 30 2.00 6782 20 1.15 7844 12 2.05 8210 8 1.80 8310 7 2.00 9111 6 3.00 Boreki Enterprises has the following 10 items in inventory. Theodore Boreki asks you, a recent OM graduate, to divide these items into ABC classifications. •• 12.4 ITEM ANNUAL DEMAND COST/UNIT A2 3,000 $ 50 4,000 12 Bacon 56 5 88 Sugar 4 2 C7 1,500 45 Dl 6.000 10 .) Which is the most expensive item, using annual dollar volume? Which are C items? What is the annual dollar volume for all 20 items? Px E9 1,000 20 F3 500 500 G2 300 1,500 Lindsay Electronics, a small manufacturer of e1ec­ research equipment, has approximately 7,000 items in its tinvpntory and has hired Joan Blasco-Paul to manage its inven­ . Joan has determined that \0% of the items in inventory A items, 35% are B items, and 55% are C items. She would to set up a system in which all A items are counted monthly 20 working days), all B items are counted quarterly (every working days), and all C items are counted semiannually 120 working days). How many items need to be counted day? H2 600 20 15 1,750 10 J8 2,500 5 L. Houts Plastics is a large manufacturer of injection­ plastics in North Carolina. An investigation of the com­ manufacturing facility in Charlotte yields the information in the table below. How would the plant classify these according to an ABC classification system? Px a) Develop an ABC classification system for the to items. b) How can Boreki use this information? c) Boreki reviews the classification and then places item A2 into the A category. Why might he do so? Px William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: • 12.5 Demand D = 19,500 units/year Ordering cost S = $25/order Holding cost H = $4/unitfyear of Parkside Plumbing. At its largest manufacturing facility.15 Abey KuruvilIa. and b) Identify the economic order quantity and consider the' cations for making an error in calculating economic quantity. The company operates 300 days per year.14 Lead time for one of your fastest-moving products 21 days.16 Henry Crouch's law office has traditionally ink refills 60 units at a time.6 Joe Henry's machine shop uses 2.500 brackets during the course of a year. S = $45 per order. F!K • "12. with an holding cost of $24. in Jakarta. F!K = "12.. a) Calculate the reorder point for the notebook binders that she stocks. a) What would be an appropriate reorder point? b) How does your answer change if demand during lead doubles? c) How does your answer change if demand during lead drops in half? . It takes about 5 days for an order to arrive.na components? e) What is the annual cost of ordering and holding . b) What are the annual holding costs for the workbooks? c) What are the annual ordering costs? F!K "12.000 units. The cost of each unit is $100. and the ordering cost is $20 per order. subcomponents at a rate of 12. For this order policy (of Q 150) to be optimal. Ordering cost is $40. uses a certain spare part that costs $25 for each order. how many units should be ordered each time an order is placed? b) If the holding cost per unit was $6 instead of $5. a) What is the economic production quantity? b) How many production runs per year will be made? c) What will be the maximum inventory level? d) What percentage of time will the facility be nT{ll1n".000 units? F!K "12.000 per month. how many units should be ordered each time an order is placed? b) How many orders per year are needed with the optimal policy? c) What is the average inventory if costs are minimized? d) Suppose that the ordering cost is not $20.75 Lead time: 2 days Working days per year: 250 a) Given the above information. His best-selling bed has an annual demand of 400 units. a) To minimize cost.500 per year (of 250 working days).7 Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. Thomas's fastest-moving inventory item has a demand of 6. (This is a corporate operation. and the inventory carrying cost is $10 per unit per year. determine what the ordering cost would have to be. and it uses these. what would be the economic order quantity (EOQ)? b) Given the EOQ. The aver­ age ordering cost is $30 per order.000 units. One of the compo­ nents has an annual demand of 250 units. and the lead time to receive an order from the supplier is 2 working days. c) Find the annual ordering costs.10 M. The firm estimates that cost is 40% of the $10 unit cost and that annual demand is 240 units per year. and ordering costs $30 per order.13 Race One Motors is an Indonesian car manufacturer. including the cost of the 6. holding cost is $5 per unit per year. Cotteleer Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. The assumptions of the basic EOQ thought to apply. what is the impact on the firm's ordering .50.000 units per year. and Cotteleer has been ordering 150 units each time an order is placed. a) For what value of ordering cost would its action be b) If the true ordering cost turns out to be much greater answer to (a).12 Matthew Liotine's Dream Store sells beds and assorted supplies. and there are 250 working days per year.50 Order cost per order: $18.500 Holding cost per bracket per year: $1. H a) b) c) " What is the economic order quantity? How does your answer change if the holding cost doubles? What if the holding cost drops in half? F!K "" "12.rv?~ "12. how many orders would be made each year? What would be the annual order cost? d) Given the EOQ. The yearly demand for these connectors is 15. The cost to place and process an order from the supplier is $75. Holding costs are $2 per item per year. what would be the optimal order quantity? F!K • " 12.60. and the demand for 1 week is 120 units.8 Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. what is the total annual cost of managing the inventory? e) What is the time between orders? Q What is the reorder point (ROP)? F!K '12. b) Find the annual holding costs.544 PART 3 MANAGING OPERATIONS a) Calculate the EOQ for the workbooks. d) What is the reorder point? F!K '-12.'TIvp'nt". a) To minimize the total cost. a) Calculate the total cost for order sizes of 25. Demand during this period averages 100 units per day. what would be the average inventory? What would be the annual inventory holding cost? c) Given the EOQ. 40. These brackets are purchased from a sup­ plier 90 miles away. the company pro­ duces subcomponents at a rate of 300 per day. and this is constant throughout the year. The following information is known about the brackets: Annual demand: 2. 12. Carrying cost is estimated to be $1 per unit per year. Southeastern estimates its annual holding cost for this item to be $25 per unit. Dana Duncan operates her busi­ ness 300 days per year and finds that deliveries from her supplier generally take 5 working days.11 Annual demand for the notebook binders at Duncan's Stationery Shop is 10. a) Find the economic order quantity.9 If D = 8.) a) What is the EOQ? b) What is the average inventory if the EOQ is used? c) What is the optimal number of orders per year? d) What is the optimal number of days in between any two orders? e) What is the annual cost of ordering and holding inventory? Q What is the total annual inventory cost. b) Why is this number important to Duncan? '12. and = $2 per unit per month. She decides she needs to order some more silverware. makes flashing lights for toys. The holding cost is $35 per unit per year. The holding cost is $0.21 Wang Distributors has an annual demand for an air­ port metal detector of 1. "12. he can get a 5% dis­ count on the cost of the detectors. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. a) How many tires should Rocky Mountain order each time it places an order? b) What is the total cost of this policy? Px "12. Ordering cost is $50. her annual holding . Last Friday night.400 units. See the accompanying table. The price structure is shown below. . Wheel-Rite supplies Cal­ Tex.60 1.000 pieces brings the price to $1. The cost of a typical detector to Wang is $400.17 Radovilsky Manufacturing Company.22 M. The com­ pany's supplier. decides to offer price concessions in order to attract larger orders.82 Quantity needed to qualify for the discount = 6. Annual usage is 2. and hold these integrated chips? b) Bell Computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in (a).10 $16. Lisa's order costs are $200 per order. including ordering.24 Rich Blue Chip's Price Structure QUANTITY PURCHASED 1-99 units PRICE/UNIT $350 100-199 units $325 200 or more units $300 a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order. and annual holding cost per unit is $5. including the cost of the Iights?Px The catering manager of La Vista Hotel. The cost of each light is $1. a larger assembly company.000 flashing lights per year and has the capability of producing 100 per day. For a small order (2. supplies both edu­ cational and commercial customers with memory and storage devices.000 go-cart tires per year. Their price lists are shown in the table. Expected demand is 700 units per month. Setting up the light production costs $50.20 D = 36. the owner. and the annual demand is 45. What is the optimal order quantity. in Hayward.40/piece. Rich Blue Chip Manufacturing. they did not have enough knives. and the ordering cost is $25 per order. is disturbed by the amount of silverware she is losing every week.400 valves.00 800+ 15.000 pieces.23 ALLEN MFG. Carrying cost is estimated to be 20% of the unit cost.000 wheel bearings each year. The company operates its production facility 300 days per year.cost is 20% of the purchase price of the tires per year.10 a) What is the economic order quantity? b) Which supplier should be used? Why? c) What is the optimal order quantity and total annual cost of ordering.19 Cesar Rego Computers. and holding cost is $.25 Chris Sandvig Irrigation. For the best option: a) What is the optimal order quantity? b) What is the annual holding cost? c) What is the annual ordering (setup) cost? d) What are the annual costs of the silverware itself with an opti­ mal order quantity? e) What is the total annual cost. but wants to take advantage of any quantity discounts her vendor will offer. has summarized the price list from four potential suppliers of an underground control valve. and purchasing the silverware? Px "12.001 and above reduces the price to $1.18 Arthur Meiners is the production manager of Wheel­ Rite. a small producer of metal parts. with 10. If she orders 2. and what is the optimal annual cost? Px ••• 12. If Ping Wang.85 Discount price = $0.001-5. 12.10 per light per year. Should Wang take the quantity discount? Px •• 12.60 per wheel bearing per year.000 pieces. the price drops to $1. order cost is $10 per order. when her crew tried to set up for II banquet for 500 people.45 Purchase price = $ . holding. and 10. It currently faces the following ordering decision relating to purchases of very high-density disks: _. California.000+ 15. VanOyen Manufacturing has gone out on bid for a regulator component. and $17 per tire if 1. Inc. a) What is the optimal size of the production run? b) What is the average holding cost per year? c) What is the average setup cost per year? d) What is the total cost per year.80/piece. a Mississippi chain of com­ puter hardware and software retail outlets. and holding the component? Px Bell Computers purchases integrated chips at $350 per chip. and sales are steady. Inc.33 per unit.OOO-tires are ordered.-12. QUANTITY UNIT PRICE 1-499 $16. 5. the ordering cost is $120 per order. a) What is the optimum production quantity? b) What is the maximum number of wheel bearings that will be in inventory at Wheel-Rite? c) How many production runs of wheel bearings will Wheel-Rite have in a year? d) What is the total setup + holding cost for Wheel-Rite? Px . P. her vendor quotes a price of$1.50 400-799 15. Lisa Ferguson. $18 per tire if 500 or more-but fewer than I..000 disks S = $25 H = $0.000 disks Should the discount be taken? Px i MANAGING INVENTORY 545 Rocky Mountain Tire Center sells 20.000 or fewer pieces). Wheel-Rite can produce 500 wheel bearings per day. Setup cost for Wheel-Rite is $40.00 1-399 500-999 15. Cal­ Tex is a just-in-time manufacturer and requires that 50 bearings be shipped to it each business day. QUANTITY UNIT PRICE BAKER MFG. costs are 5%.001-10. and the hold­ ing. purchasing. and annual inventory holding costs are $3. It has orders for about 12.000 or more tires are ordered.25. This order has been stable for some time.. The purchase price is $20 per tire if fewer than 500 tires are ordered. •• 12. The ordering cost for each order is $40.60/piece. purchase.CHAPTER 12 "12. orders in quantities of 300 or more. at 400 per month. 50 1-199 $34.2 IX o •• 12.4 400 0. is 200 chairs.60 1. an organization that sells training sets.2 100 0. how much safety stock should be carried? PRICE 1-99 $34.x •• 12.10 500-999 16.S5 1.. the standard deviation for BX-5 was 7. lead time demand for PC jump drives averages 50 units (normally distributed).50 SOO-I.S0 150-299 32. Carrying cost is $30 per unit per year.00 75--149 33. The reorder point.x Barbara Flynn is in charge of maintaining hospital supplies at General Hospital.00 400+ 31. and which supplier should be used? c) What is the total cost for the most economic order size? d) What factor(s) should be considered besides total cost? P.75 200-399 33.75 VENDOR C QUANTITY PRICE VENDOR D QUANTITY without safety stock. with a standard deviation of 5 drives. Given the demand probabilities during the lead time. 0'·12.2 400 0.75 50-74 34.1 0 100 0.25 a) What is the economic order quantity for each supplier? b) What quantity should be ordered.199 16.2 300 0.00 1-399 $17. Over the past years.00 200-399 32.2 •• 12. the mean lead time demand for bandage BX-5 was 60 (and was normally dis­ tributed).10 DEMAND DURING LEAD TIME (KILOS) PROBABIlITY 0.50 500+ 30.50 400+ 31.15 500+ 30. stands for Body Beautiful Number I.29 Tobacco is shipped from North Carolina to a ciga­ rette manufacturer in Cambodia once a year. The cost schedules of two suppliers are as follows: VENDOR 1 QUANTITY PRICEILB VENDOR 2 QUANTITY PRICEILB 1-499 $17. and estimates order costs to be $50 per order. is 200 kilos. and cost of a stockout is $70 per chair per year. To meet demand.25 100-199 33. once a year.75 75--149 34.55 150-299 32. how much safety should be carried? DEMAND DURING LEAD TIME PROBABILITY o 0. Ms.35 300-499 31.1 200 0. Management wants a 97% service level.2 300 0. Mr. The carrying cost is $15 per kilo per year. estimates the holding cost to be 50% of the purchase price (because of spoilage). During the past year.27 Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both tem­ perature and humidity can be controlled. has an ordering cost of $40 for the BB-l set.000+ 16. Emery uses 800 pounds per month of the chemical.x Kathmandu Shop. and the cost of a stockout is $70 per kilo per year.00 1-74 $34. Given the following demand probabilities during the lead time.. Beautiful.200+ 16.31 Mr. The cost for BB-l is estimated to be $50 per set.26 ···12. orders large quantities of BB-l seven times a year. Beautiful has observed the following demand the lead time for BB-l: .28 0012.) The carrying BB-l is $5 per set per year.75 400-799 16. without stock. a) What value of Z should be applied? b) How many drives should be carried as safety stock? c) What is the appropriate reorder point? P. called The Based on available information. Furthermore. a) What safety stock level do you recommend for BX~5? b) What is the appropriate reorder point? P.546 PART 3 MANAGING OPERATIONS Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost? P.2 200 0.30 Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz's chain of retail stores. The reorder point. Flynn would like to maintain a 90% service level.60 300-499 31.x VENDOR A QUANTITY PRICE VENDOR B QUANTITY PRICE 1-49 $35. Mr. but at a 50% dis­ count off the regular $10 price. how many days would production continue? Under the current policy.000 Acct. a) For a 90% service level.1 . Attendance averages 90.500 Research and development 2. The production capacity is 200 units per Each time production starts.000 programs. Bud Banis. programs are sent to a recycling center that pays only 10 per program. and clean the ~uipment. for $4 each.M. the president of Emarpy. The lead time for delivery is normally distributed with a mean of 4 days and standard deviation of I day. How many pounds should she order each day? .39 . What level of safety stock be maintained for BB-I?FIx ••• 12. and 6 A. What is the optimal stocking level? '·12.38 Chicago's Hard Rock Hotel distributes a mean of I . Daily demand is constant at 12.2 . how many production runs per year would be required? What would the annual setup cost be? Ifthe current policy continues. and demand is estimated to be normally distributed. What is the daily demand of this product? If the company were to continue to produce 400 units each time production starts. following a normal distribution.2 . concerned about the production policy for the company's !'eSt-selling refrigerator. who has a nearby grocery store. it costs the company $120 to materials into place. lead ti~ is normally distributed with an average of 6 weeks and a standard deviation of 2 weeks.000 bath towels per day to guests at the pool and in their rooms.CHAPTER 12 DEMAND DURING LEAD TIME 40 50 60 70 80 90 PROBABILITY .750 New product development 2. What is the cost of underestimating demand for each pro­ gram? What is the overage cost per program? How many programs should be ordered per game? What is the stockout risk for this order size? First Printing has contracts with legal firms in San to copy their court documents. The annual demand has been about units each year.500 Purchasing salaries &wages 30. You have also determined that 200 orders were placed last year. To help you get a handle on the carrying and ordering costs. so they will be fresh when customers arrive. a) What is the safety stock? b) What is the ROP? FIx "12.M. Day-old cakes are virtually always sold. FIx ~ranCISCO ••• 12. The hotel expects a 98% service level to satisfy high guest expectations.000 Warehouse supplies Receiving and incoming inspection 1. Which is preferable? FIx Cynthia Knott's oyster bar buys fresh Louisiana oys­ ters for $5 per pound and sells them for $9 per pound. costs to pay invoices 500 Warehouse salaries &wages 12. He thought that these costs might be appropriate for the new product. with a mean of 25 and a standard deviation of 4. Your job as a new operations management graduate is to help Kim determine the economic order quantity for the new product. Demand is also a variable and normally distributed with a mean of 200 cigars per week and a standard deviation of 25 cigars. the cost to print each program is $1. overhead Product advertising Spoilage Sending purchasing orders COST fACTOR Purchase order supplies COST (S) 280 800 500 300 1.33 University of Florida football programs are printed week prior to each home game. how many refrigerators should be produced in each production run? How much would this save the company in inventory costs compared to the current policy of producing 400 in each production run? FIx 012. production plan calls for 400 refrigerators to be Imuuceu in each production run.0 12. The cost of baking a cake is $6. what is the ROP? b) What is the ROP for a 95% service level? c) Explain what these two service levels mean. The laundry firm that has the linens contract requires a 2-day lead time. Henrique Correa's bakery prepares all its cakes between 4 A. of whom two-thirds usually the program. with a mean of 100 pounds and a standard deviation of 15 pounds. Any oysters not sold that day are sold to her cousin. A 97% service level is expected. Assume there are 250 work­ days per year. what would the total annual setup cost and holding cost be? If Bud Banis wants to minimize the total annual inventory cost.38 reorder point for BB-I is 60 sets.000 inven­ tory items that were carried or held during the year. reset the assembly line. This demand is normally distributed with a standard deviation of 100 towels per day.2 1. COST FACTOR COST (5) Taxes for the warehouse 2. The demand for the new product has been forecasted to be about 1. and this demand has been constant the year.0 MANAGING INVENTORY 547 ••• 12. based on occupancy.000 wpaming and loyal Gators fans.37 Kim Clark has asked you to help him determine the best ordering policy for a new product. First's ROP.800 Inventory insurance 600 800 750 Pilferage of inventory Inventory obsolescence 800 Purchasing Dept.000 units annually.2 .38 Gainesville Cigar stocks Cuban cigars that have vari­ able lead times because of the difficulty in importing the product. Dept.000 He also told you that these data were compiled for 10. The standard deviation is 5. Kim has given you the list of last year's costs.500 pages of documents. The holding cost of a refrigerator is $50 per year. for $2 per pound. how many refrigerators would be in inventory when production stops? What would the aver­ age inventory level be? If the company produces 400 refrigerators at a time.32 Emarpy Appliance is a company that produces all of major appliances. Cynthia believes that demand follows the normal distribution. 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