Assignments for Chapters 13
# 2, 7, 13, 20, 25, 33 (optional)
2. The following table
contains figures on the monthly volume and unit costs for a random sample of 16
items for a list of 2,000 inventory items.
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Dollar
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Item
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Unit Cost
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Usage
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Usage
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Category
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K34
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10
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200
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2,000
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C
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K35
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25
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600
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15,000
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A
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K36
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36
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150
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5,400
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B
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M10
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16
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25
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400
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C
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M20
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20
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80
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1,600
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C
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Z45
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80
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250
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16,000
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A
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F14
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20
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300
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6,000
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B
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F95
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30
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800
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24,000
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A
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F99
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20
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60
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1,200
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C
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D45
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10
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550
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5,500
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B
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D48
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12
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90
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1,080
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C
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D52
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15
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110
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1,650
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C
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D57
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40
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120
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4,800
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B
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N08
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30
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40
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1,200
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C
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P05
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16
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500
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8,000
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B
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P09
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10
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30
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300
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C
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a.
Develop an A-B-C classification for these items. [See table.]
b.
How could the manager use this information? To allocate control efforts.
c.
Suppose after reviewing your classification scheme, the manager decides
to place item P05 into the “A” category. What would some possible
explanations be for that decision?
It might be important for some reason
other than dollar usage, such as cost of a stockout, usage highly correlated to
an A item, etc.
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7.
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H = $2/month
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L = $55
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D1 = 100/month (months 1-6)
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D2 = 150/month (months 7-12)
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7.
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(continued)
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a.
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Qo
=
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2DS
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D1:
Qo =
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2(100)55
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= 74.16
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H
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2
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D2:
Qo =
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2(150)55
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= 90.83
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2
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b.
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The
EOQ model requires this.
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c.
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Discount of $10/order is equivalent to S - 10 = $45
(revised ordering cost)
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1-6
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TC74 =
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$148.32
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TC50 =
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50
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(2) +
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100
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(45) = $140*
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2
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50
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TC100 =
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100
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(2) +
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100
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(45) = $145
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2
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100
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TC150 =
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150
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(2) +
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100
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(45) = $180
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2
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150
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7-12
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TC91 =
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$181.66
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TC50 =
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50
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(2) +
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150
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(45) = $185
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2
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50
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TC100 =
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100
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(2) +
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150
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(45) = $167.5
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2
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100
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TC150 =
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150
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(2) +
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150
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(45) = $195
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2
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150
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13.
D = 18,000 boxes/yr.
S = $32
H = $.20/box per yr.
a.
100 to Qo =
Since this quantity is feasible in the range 200 to 4,999,
its total cost and the total cost of all lower price breaks (i.e., 5,000 and
10,000) must be compared to see which is lowest.
TC2,400 =
TC5,000 =
TC10,000 =
Hence,
the best order quantity would be 10,000 boxes.
20.
LT demand = 600 lb.
s
LT = 52 lb.
risk = 4% Õ
Z = 1.75
a. ss = Zs
LT = 1.75 (52 lbs.) = 91 lbs.
b. ROP = Average demand during lead time + safety stock
ROP = 600 + 91 = 691 lbs.
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25.
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LT = 3 days
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S = $30
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D = 4,500 gal
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H = $3
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360 days/yr.
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=
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4,500
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= 17.5/day
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360
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sd
= 2 gal.
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Risk = 1.5% Õ
Z = 2.17
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a.
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Qty.
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Unit Price
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Qo
=
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2DS
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= 300
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1 - 399
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$2.00
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H
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400 - 799
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1.70
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800+
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1.62
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TC = Q/2 H + D/Q S + PD
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TC300 = 150 (3) + 15 (30) + 2(4,500) =
$9,900
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TC400 = 200(3) + 11.25(30) + 1.70(4,500) =
$8,587.50*
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TC800 =
400(3) + 5.675(30) + 1.62(4,500) = $8,658.75
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b.
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ROP
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 =
LT + Z LT sd
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= 12.5 (3) + 2.17
3 (2)
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= 37.5 + 7.517
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= 45.107 gal.
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