ISDS Chapters 8-16 Quiz
Using the raw data for Thompson Industries' Suppliers provided below, analytics manager Vicky Luo wishes to set up Conditional Formatting in Excel to determine 5 suppliers with the largest total purchases values in column D. Which Conditional Formatting 'Rule Type' should she select?
"Format only top or bottom ranked values"
An employee produces 10 parts during a shift in which he made $90. What is the labor content of the product?
$9 --------- labor content = wages/parts produced LC = $90/10 = $9
What is the formula for stockout risk?
1 - service level
Goals of JIT partnerships
1. obtain improved quality and reliability 2. removal of in-plant inventory 3. removal of unnecessary activities 4. removal of in-transit inventory
Cynthia Knott's oyster bar buys fresh Louisiana oysters for $3 per pound and sells them for $9 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $2 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 120 pounds and a standard deviation of 18 pounds. How many pounds should she order each day?
139.2 ----- Using the single period inventory model: Cs = sale price - cost per unit = 9-3 = 6 Co = cost per unit - salvage = 3-2 = 1 Service level = Cs/(Cs+Co) = 6/(6+1) = .8571 .8571 is the z table value --> 1.065 Order amount = Average demand + Zxstdv Order = 120 + (1.065)(18) = 139.2
The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 20 and the daily production rate is 100. What is the production order quantity for this problem? (round to nearest whole number)
195 ------ Qp* = sqrt of (2DS)/H(1-(d/p)) Qp* = sqrt of (2x3650x50)/(12)(1-(20/100) = 194.99 (~195)
Dan Bumblauskas is the owner of a small Iowa company that produces electric knives used to cut fabric. The annual demand is for 10,000 knives, and Dan produces the knives in batches. On average, Dan can produce 120 knives per day; during the production process, demand has been about 20 knives per day. The cost to set up the production process is $90, and it costs Dan $0.50 to carry a knife for 1 year. How many knives should Dan produce in each batch?
2078 ---------- Givens: D = 10,000 ; d = 20 ; p = 120 ; S = 90 ; H = .50 Qp* = sqrt of (2DS)/[H(1-(d/p))] Qp* = sqrt of (2x10,000x90)/[.50(1-(20/120)] Qp* = 2078
Henrique Correa's bakery prepares all its cakes between 4 A.M.and 6 A.M.so they will be fresh when customers arrive. Day-old cakes are virtually always sold, but at a 50% discount off the regular $16 price. The cost of baking a cake is $10, and demand is estimated to be normally distributed, with a mean of 20 and a standard deviation of 6. What is the optimal stocking level?
24 cakes ----- Cs = sale price - cost = 16-10 = 6 Co = cost - salvage = 10 - (16/2) = 10-8 = 2 Service level = 6/(6+2) = .75 In z table look for .75 --> z = 0.675 Optimum stocking = average demand + (z x stdv) Optimum = 20 + (0.675 x 6) = 24
The minimum record accuracy required for successful MRP is:
99%
Meena Distributors has an annual demand for an airport metal detector of 1,420 units. The cost of a typical detector to Meena is $400. Carrying cost is estimated to be 18% of the unit cost, and the ordering cost is $22 per order. If Purushottama Meena, the owner, orders in quantities of 300 or more, he can get a 4% discount on the cost of the detectors. A) What is the EOQ without the discount? B) Should Meena take the quantity discount?
A) 29.5 B) Since the total cost with the discount is less than the total cost without the discount, Meena should order 300 units at a time in order to qualify for the discount. -------- EOQ = square root of (2DS)/H EOQ = sqrt of (2x1420x22)/(400x.18) = 29.5 Find total cost with Q = 29.5 --> 570,121 Find total cost with Q = 300 (find new P first; 400x.96 = 384) --> 555,752 TC(300)<TC(29.5) so Meena should take the discount
A) Which of the following data visualization graphs plots data that are readily divided into categories? B) Which of the following business analytics tools take(s) large volumes of data and potential variables to form groupings of variables to identify complex paths and associations? C) Which of the following data visualization graphs provides a best−fit line through a central tendency of points on a graph? D) Which of the following data visualization graphs represents percentages or portions of a whole? E) Which of the following data visualization graphs shows the frequency of occurrences of a variable? F) Which of the following data visualization graphs illustrates relative increases or decreases of categories in time or at points of comparison?
A) Bar Graph (divided into categories = bar graph) B) Neural Networks (complex = neural) C) Regression line (best-fit = regression) D) Pie Chart (portions = pie) E) Histogram (frequency of variable = histogram) F) Slope graph (change in categories = slope)
A) Which of the following business analytics tools identifies and organizes data into groups with similar attributes? B) Which of the following business analytics tools is designed to explore very large datasets, looking for relevant patterns or relationships?
A) cluster analysis (similar groups = cluster) B) data mining (large sets w/ patterns = data mining)
Which of the following statements is NOT true? A. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. B. Supply chain management describes the coordination of all supply chain activities, starting with raw materials, and ending with a satisfied customer. C. A supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. D. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain's competitive advantage and benefits to the ultimate consumer.
A. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.
Which of these statements about the production order quantity model is FALSE? A. Average inventory is more than one-half of the production order quantity. B. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. C. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. D. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. E. None of the above is false.
A. Average inventory is more than one-half of the production order quantity.
Which of the following is NOT one of the four categories (areas) to click-and-drag fields into when using the PivotTable function? A. Buckets B. Columns C. Filters D. Values E. Rows
A. Buckets
The fixed−period inventory system requires more safety stock than a fixed-quantity system because: A. a stockout can occur during the review period as well as during the lead time. B. replenishment is not instantaneous. C. setup costs and holding costs are large. D. this model is used for products that require very high service levels. E. this model is used for products that have large standard deviations of demand.
A. a stockout can occur during the review period as well as during the lead time.
Enterprise resource planning (ERP): A. automates and integrates the majority of business processes. B. seldom requires software upgrade or enhancement. C. does not integrate well with functional areas other than operations. D. is inexpensive to implement. E. all of the above
A. automates and integrates the majority of business processes.
Supply chain managers outsource logistics to meet three goals: A. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed. B. lower delivery costs, improve delivery reliability and speed, and provide better market response. C. drive down inventory investment, lower delivery costs, and provide better market response. D. drive down inventory investment, improve delivery reliability and speed, and provide better market response.
A. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed.
In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A. increase by about 41%. B. increase by 100%. C. increase by 200%. D. increase, but more data is needed to say by how much. E. either increase or decrease.
A. increase by about 41%.
Airfreight A. is a fast-growing mode of shipping. B. represents about 10% of the tonnage shipped in the United States. C. is the oldest means of freight transportation. D. is the best way to transport natural gas.
A. is a fast-growing mode of shipping.
A disadvantage of the fixed-period inventory system is that: A. since there is no count of inventory during the review period, a stockout is possible. B. orders usually are for larger quantities. C. additional inventory records are required. D. it involves higher ordering costs than the fixed quantity inventory system. E. the average inventory level is decreased.
A. since there is no count of inventory during the review period, a stockout is possible.
What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A. time fences B. lot sizing C. time phasing D. closed loop system E. modular bills
A. time fences
Which of the following statements is true regarding cross-sourcing? A. Cross-sourcing develops the ability to produce goods or services previously purchased or actually buying a supplier or distributor. B. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other. C. Cross-sourcing describes suppliers who become part of a company coalition. D. Cross-sourcing enhances technological skills.
B. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
If a factory wants to cut its current lot size in half, by what proportion must setup cost change? A. Setup cost must also be cut in half from its current value. B. Setup cost must be cut to one fourth its current value. C. Setup cost must quadruple from its current value. D. Setup cost must double from its current value. E. Cannot be determined.
B. Setup cost must be cut to one fourth its current value.
Which of the following best represents the relationship between the master production schedule (MPS) and the aggregate plan? A. The MPS precedes the aggregate plan in the planning process. B. The MPS disaggregates the aggregate plan. C. The MPS is the same as the aggregate plan. D. There is no relationship between the MPS and the aggregate plan.
B. The MPS disaggregates the aggregate plan.
Which one of the following statements is TRUE about the kanban system? A. It is useful to smooth operations when numerous quality problems occur. B. The customer workstation signals to the supplier workstation when production is needed. C. The quantities in the containers are usually large to reduce setup costs. D. It is associated with a push system. E. The supplier workstation signals the customer workstation as soon as a batch is completed.
B. The customer workstation signals to the supplier workstation when production is needed.
A grocery store is attempting to implement a kanban system. Which of the following would NOT be an application of kanbans? A. A red light on top of the cashier's lane signals that the cashier needs additional change replenished. B. The meat department stocking up on turkeys before Thanksgiving. C. A line of 5 people in the Chinese department signaling the department to heat 5 orders of crab rangoon. D. An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. E. All of the above are kanban applications.
B. The meat department stocking up on turkeys before Thanksgiving.
Low-level coding means that: A. the code being used is the code for the lowest level in the BOM structure. B. a component item is coded at the lowest level at which it appears in the BOM structure. C. the lowest-paid staff member in the production department performs the coding. D. a final item has only a few levels in the BOM structure. E. the top level of the BOM is below level zero and that BOMs are not organized around the finished product.
B. a component item is coded at the lowest level at which it appears in the BOM structure.
Which of the following could reduce distribution risk? A. cross-country diversification B. careful selection, monitoring and effective contracts with penalties C. secure IT systems D. use multiple suppliers
B. careful selection, monitoring and effective contracts with penalties
The purpose of safety stock is to: A. Replace failed units with good ones. B. control the likelihood of a stockout due to variable demand and/or lead time. C. eliminate the possibility of a stockout. D. protect the firm from a sudden decrease in demand. E. eliminate the likelihood of a stockout due to erroneous inventory tally.
B. control the likelihood of a stockout due to variable demand and/or lead time.
One of the major advantages of process-oriented layouts is: A. high equipment utilization. B. flexibility in equipment and labor assignment. C. large work-in-process inventories. D. smooth and continuous flow of work. E. small work-in-process inventories.
B. flexibility in equipment and labor assignment.
Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A. overproduction B. inventory C. defective product D. queues E. transportation
B. inventory
Which of the following is NOT among the eight determinants of revenue and volume for a service firm? A. competition in the area B. shipment cost of finished goods C. purchasing power of the customer-drawing area D. uniqueness of the firm's and the competitors' locations E. quality of management
B. shipment cost of finished goods
Using the data provided below, supply chain manager Jonathan Jackson wishes to use Excel's Conditional Formatting to highlight any entries in column B that are smaller than this year's threshold level for distributor bonuses contained in cell C2 (not shown in the figure). What formula should go into the box Format values where this formula is true:?
B2<$C$2
Using the data provided below, supply chain manager Jonathan Jackson wishes to use Excel's Conditional Formatting to highlight any entries in column B that are smaller than the individual threshold levels for distributor bonuses contained in cells C2:C10 (not shown in the figure). What formula should go into the box Format values where this formula is true:?
B2<C2 ------- If comparing to multiple individual threshold levels, no dollar signs!! If comparing to one threshold, $C$2
Which of the following statements about ABC analysis is FALSE? A. Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis. B. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. C. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. D. In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. E. In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have.
C. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
Which of the following would NOT reduce the bullwhip effect? A. Reduce lot sizes B. Implement single-stage control of replenishment C. Increase end-of-quarter sales bonuses D. Share point-of-sales data with all members of the supply chain
C. Increase end-of-quarter sales bonuses
JIT makes quality cheaper because: A. the cost of low quality can be hidden in inventory. B. JIT adds more buffers to the system. C. JIT prevents long runs of defects. D. B and C E. A, B and C
C. JIT prevents long runs of defects. C only!!!!
________ is a tool to facilitate in-depth analysis of numeric data by applying filters and providing summary computations for categories and subcategories of the dataset. A. Graphical analysis B. Conditional Formatting C. PivotTable D. COUNTIF E. Visual inspection
C. PivotTable
Which of the following statements regarding a pull system is TRUE? A. Large lots are pulled from upstream stations. B. Manufacturing cycle time is increased. C. Problems become more obvious. D. Work is pulled to the downstream stations before it is actually needed. E. None of the above is true of a pull system.
C. Problems become more obvious.
Among the following choices, an operations manager might best evaluate political risk of a country by looking at which type of country ranking? A. based on magnitude of government social programs B. based on average duration between presidential/prime minister elections C. based on corruption D. based on cost of doing business E. based on competitiveness
C. based on corruption
When making a location decision at the country level, which of these would be considered? A. land/construction costs B. corporate desires C. location of markets D. zoning restrictions E. air, rail, highway, waterway systems
C. location of markets
Because problems with fixed-position layouts are so difficult to solve well onsite, operations managers: A. virtually never employ this layout strategy. B. utilize this layout only for defense contractors. C. often complete as much of the project as possible offsite. D. increase the size of the site. E. utilize this approach only for construction projects such as bridges and office towers.
C. often complete as much of the project as possible offsite.
Which of the following would NOT generally be a motive for a firm to hold inventories? A. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand B. to decouple various parts of the production process C. to minimize holding costs D. to take advantage of quantity discounts E. to hedge against inflation
C. to minimize holding costs ------------ holding inventory increases holding costs
What is required for an MRP system to work? A. A high number of purchase orders outstanding B. Long lead times C. A small bill of material D. Accurate inventory records
D. Accurate inventory records
Which of the following statements is FALSE? A. Predictive analytics invokes advanced optimization tools to recommend a strategy or action. B. Descriptive analytics analyzes past data to predict the future. C. Prescriptive analytics characterizes and summaries data to facilitate understanding. D. All of the above. E. None of the above.
D. All of the above.
Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor? A. Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source. B. Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances. C. Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers. D. Few people will travel out-of state for a routine haircut. E. Patients will travel very long distances to have their hernia surgeries performed at Shouldice Hospital.
D. Few people will travel out-of state for a routine haircut.
Which of the following is FALSE regarding the links between JIT and quality? A. As quality improves, fewer inventory buffers are needed; in turn, JIT performs better. B. Inventory hides bad quality; JIT immediately exposes it. C. If consistent quality exists, JIT allows firms to reduce all costs associated with inventory. D. JIT increases the cost of obtaining good quality. E. JIT reduces the number of potential sources of error by shrinking queues and lead times.
D. JIT increases the cost of obtaining good quality.
Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A. The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. B. The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. C. The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. D. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. E. All of the above are true.
D. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. --------- key word: multiplied by
Which of the following statements is NOT one of the differentiation strategy decisions? A. Minimize inventory to avoid product obsolescence. B. Modular design to aid product differentiation. C. Gather and communicate market research data. D. Use buffer stocks to ensure speedy supply.
D. Use buffer stocks to ensure speedy supply.
Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or distortion? A. training of supply chain partners on the proper interpretations and use of information B. redundant databases C. secure IT systems D. alternate sourcing
D. alternate sourcing
ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A. unit price B. the number of units on hand C. annual demand D. annual dollar volume E. item quality
D. annual dollar volume
Industrial location analysis typically attempts to: A. focus more on human resources. B. maximize sales. C. ignore exchange rates and currency risks. D. minimize costs. E. avoid countries with strict environmental regulations.
D. minimize costs.
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A. about 24 B. about 18 C. about 32 D. more than 40 E. about 38
D. more than 40 ------- ROP formula for variable demand and constant lead time = (avg daily D x LT) + (z)(stdv D)(sqrt of LT) ROP = (8 x 4) + (1.65 x 3 x sqrt of 4) = 41.9
Which of these factors would be considered when making a location decision at the site level? A. government rules, attitudes, stability, incentives B. proximity to raw materials and customers C. cultural and economic issues D. zoning regulations E. cost and availability of utilities
D. zoning regulations
What is the term of shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs?
Drop Shipping
Which of the following is an element of inventory holding costs? A. material handling costs B. pilferage, scrap, and obsolescence C. investment costs D. housing costs E. All of the above are elements of inventory holding costs.
E. All of the above are elements of inventory holding costs.
Which of the following is TRUE regarding the steps to reducing setup times? A. The first step involves performing as much setup preparation as possible while the process/machine is operating. B. Move material closer and improve material handling are done before operator training. C. The standardization of both tooling and work procedures is advantageous to setup time reduction. D. The cycle of steps is repeated until setup time is reduced to under a minute. E. All of the above are true.
E. All of the above are true.
Which of the following statements about the basic EOQ model is TRUE? A. If the carrying cost were to increase, the EOQ would fall. B. If annual demand were to double, the number of orders per year would increase. C. If annual demand were to double, the EOQ would increase. D. If the ordering cost were to double, the EOQ would rise. E. All of the above statements are true.
E. All of the above statements are true. ----- Set up an EOQ example problem and change the numbers around to see if Q increased or decreased
Which of the following is NOT a source of variability? A. Drawings or specifications are incomplete. B. Customer demand is unknown. C. Engineering drawings are inaccurate. D. Employees, machines, and suppliers produce units late. E. Employees, machines, and suppliers produce units that conform to standards.
E. Employees, machines, and suppliers produce units that conform to standards.
Which one of the following statements is TRUE regarding JIT inventory? A. It increases if setup costs decrease. B. It hides variability. C. It exists just in case something goes wrong. D. It is minimized with large lot production. E. It is the minimum inventory necessary to keep a perfect system running.
E. It is the minimum inventory necessary to keep a perfect system running.
Traffic counts and purchasing power analysis of drawing area are techniques associated with: A. locational cost-volume analysis. B. the factor-rating method. C. the transportation model. D. a manufacturing location decision. E. a retail or professional service location decision.
E. a retail or professional service location decision.
Characteristics of just-in-time partnerships do NOT include: A. focus on core competencies. B. produce with zero defects. C. long-term contracts. D. removal of in-transit inventory. E. large lot sizes to save on setup costs and to gain quantity discounts.
E. large lot sizes to save on setup costs and to gain quantity discounts.
Which one of the following is a characteristic of a JIT partnership? A. frequent deliveries in large lot quantities B. third-party logistics never used C. maximal product specifications imposed on supplier D. active pursuit of vertical integration E. removal of incoming inspection
E. removal of incoming inspection --------------------------------------- Note: this is a characteristic of JIT partnership, but NOT A GOAL!
What is an information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders?
ERP
A focused work center is well suited to the production of a large family of products requiring similar processing, even if their demands are not very stable. True or False?
False
Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage. True or False?
False
MRP can be effective only if very accurate lot sizes are calculated in advance. True or False?
False
Product-oriented layouts tend to have high levels of work-in-process inventories. True or False?
False
The biggest advantage of a product layout is its flexibility to handle a varied product mix. True or False?
False ---- product oriented has low variety
Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants?
Lean Operations
What is the term for an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities?
Logistics management
Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. What is the term associated with this phenomenon?
Political risk
An analytics manager, Mark, highlighted all empty cells using Excel's Conditional Formatting tool for the following dataset. What steps did he take?
Select A6:H17; Rule type: Format only cells that contain, select Blanks; Color yellow.
What is the formula/steps for optimum stocking level?
Step 1: Solve for service level (Cs/(Cs+Co)) Step 2: service level = value in z table, find z Step 3: optimum stocking level = average demand + (z x stdv)
What is the formula for "percentage of time the facility will be producing components"?
Step 1: x = Days in operation/number of orders - aka: # working days/ (D/Q) Step 2: y = Q/production rate (little p) Step 3: % = (y/x)x100
A person should order _______ each day. What are the steps and formulas to solve these problems?
This is the same as "optimum stockout level" 1. Cs = sale price - cost per unit 2. Co = cost per unit - salvage value 3. Service level = Cs/(Cs+Co) - Service level = value in z table! 4. find service level in table, find corresponding z value 5. Average demand + (z value x stdv) = number to order each day
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices?
Toyota Production System (TPS)
A process-oriented layout is the traditional way to support a product differentiation strategy. True or False?
True
One reason for a firm locating near its competitors is the presence of a major resource it needs. True or False?
True
The most common tactic to arrange departments in a process-oriented layout is to minimize material handling costs. True or False?
True
Cross-docking processes items as they are received, rather than placing them in storage. True or False?
True
To reduce the risks from vertical integration, firms may choose to develop some form of formal collaboration known as
a joint venture
Chicago's Hard Rock Hotel distributes a mean of 1,000 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 100 towels per day, based on occupancy. The laundry firm that has the linen contract requires a 4-day lead time. The hotel expects a 96% service level to satisfy high guest expectations. a) What is the reorder point? b) What is the safety stock?
a) 4350 b) 350 -------- Givens: Daily demand = 1,000 ; stdv of demand = 100 ; z = 1.75 (96% on z table) ; LT = 4 days ROP formula for variable demand and constant lead time = (avg daily D x LT) + (z)(stdv D)(sqrt of LT) ROP = (1,000 x 4) + (1.75 x 100 x sqrt of 4) ROP = 4350 Safety stock = (z)(stdv D)(sqrt of LT) = 1.75 x 100 x sqrt of 4 = 350
Given the following data on a hardware item stocked by Andreas Wieland's paint store in Copenhagen, should the quantity discount be taken? D=4,410 units; S=$25; H=$5; P=$3 Discount price=$2.25 Quantity needed to qualify for discount=4,410 units a) The total cost without the discount is: b) The total cost with the discount is c) Should the quantity discount be taken?
a) The total cost without the discount is: Q = square root of (2x4410x25)/5 = 210 TC = (4410/210)(25) + (210/2)(5) + (3)(4410) = $14,280 b) The total cost with the discount is: Q = quantity for discount = 4,410 TC = (4410/4410)(25) + (4410/2)(5) + (2.25)(4410) = $20,973 c) Should the quantity discount be taken? NO, because TC with discount>TC without discount
Based on available information, lead time demand for PC jump drives averages 49 units (normally distributed), with a standard deviation of 5 drives. Management wants a 95% service level. 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?
a) What value of Z should be applied? 1.65 (look for .95 in z table) b) How many drives should be carried as safety stock? safety stock = z x standard deviation safety stock = 1.65x5 = 8.25 (rounded to 8) c) What is the appropriate reorder point? ROP = Expected demand + safety stock ROP = 49 + 8 = 57
Variables: a) optimal size of the production run = _______ b) average holding cost per year = _______ c) average setup cost per year = _______ d) average inventory = _____ e) What is the optimal number of orders per year? f) What is the optimal number of days in between any two orders? g) How many production runs per year?
a) optimal size of the production run = Q* or Qp* b) average holding cost per year = (Q/2)H or (Q/2)H(1-(d/p)) c) average setup cost per year = (D/Q)S d) average inventory = Q/2 e) optimal number of orders per year = D/Q f)optimal number of days in between any two orders = working days per year/(D/Q) g) runs per year = D/Q
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship?
blanket order
What is d? What is p?
d = daily demand rate = D/working days per year p = daily production rate = units produced per day
The main trait of a single-period model is that:
inventory has limited value after a certain period of time.
Which of the following lot-sizing techniques results in the lowest holding costs?
lot-for-lot
The main goal of retail layout is:
maximizing profitability per square foot of floor space.
The typical goal used when developing a process-oriented layout strategy is to:
minimize the material handling costs
A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified?
planning bill
What layout strategy deals with low-volume, high-variety production?
process oriented
Which type of layout features departments or other functional groupings in which similar activities are performed?
process oriented
The ________ layout's main objective is to equalize the task time for each station.
product-oriented
A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus?
revenue focus
Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 11,600 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $52. The cost of each light is $1.05. The holding cost is $0.15 per light per year. 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, including the cost of the lights?
a) What is the optimal size of the production run? Qp* = square root of (2DS)/H(1-(d/p) d = 11600/300 = 38.67 Qp* = sqrt of (2x11600x52)/(.15)(1-(38.67/100) Qp* = 3621 units b) What is the average holding cost per year? holding = (Q/2)xHx(1-(d/p)) holding = (3621/2)x.15x(1-(38.67/100)) = $166.58 c) What is the average setup cost per year? setup = (D/Q)S = (11600/3621)(52) = $166.58 d) What is the total cost per year, including the cost of the lights? TC = Setup + Holding + PD TC = 166.58 + 166.58 + (1.05 x 11600) = $12,513.16
A response strategy requires suppliers be selected based primarily on:
capacity, speed, and flexibility.
