VIEWS: 20 PAGES: 11 POSTED ON: 11/17/2012 Public Domain
(1) Yasuko’s Art Emporium (YAE) ships art from its studio located in the Far East to its distribution center located on the West Coast of the United States. YAE can send the art either via transoceanic ship freight service (15 days transit) or by air freight (2 days transit time). YAE ships 18,000 pieces of art annually. Calculate the average annual transportation inventory when sending the art via transoceanic ship freight service. AIT = _____ units (Round your answer to 1 decimal place, the tolerance is +/-0.1.) (2) Frederick’s Farm Factory (FFF) currently marintains an average inventory valued at $3,400,000. The company estimates its capital cost at 10 percent, its storage cost at 4.5 percent, and its risk cost at 10 percent. (a) Calculate the annual holding cost rate for FFF Annual holding cost rate = % (Round your answer to 1 decimal place.) (b) Calculate the total annual holding costs for FFF Total annual holding costs = $ . (3) A local nursery, Greens, uses 1560 bags of plant food annually. It costs $10 to place an order for plant food. In an effort to reduce its inventory Rapid Grower, the supplier of plant food for Green, is offering Greens two additional price breaks to consider. If the nursery orders a three-month supply, the cost per bag s $16. If Greens orders a six-month supply, the cost per bag is $14.50. Greens estimates its holding cost to be 25 percent of the unit price. Determine the most cost-effective ordering policy for Greens _____ It is cheapest to order a 3-month supply _____ It is cheapest to order a 6-month supply (4) Sam’s Auto Shop services and repairs a particular brand of foreign automobile. Sam uses oil filters throughout the year. The shop operates fifty-two weeks per year and weekly demand is 150 filters. Sam estimates that it costs $20 to place an order and his annual holding cost rate is $3 per oil filter. Currently, Sam orders in quantities of 650 filters. Calculate the total annual costs associated with Sam’s current ordering policy. Total annual costs = $ (5) The local Office of Tourism sells souvenir calendars. Sue, the head of the office, needs to order these calendars in advance of the main tourist season. Based on past seasons, Sue has determined the probability of selling different quantities of the calendars for a particular tourist season. Demand for Calendars Probability of Demand 75,000 0.15 80,000 0.25 85,000 0.30 90,000 0.20 95,000 0.10 The Office of Tourism sells the calendars for $12.95 each. The calendars cost Sue $5 each. The salvage value is estimated to be $0.50 per unsold calendar. Determine how many calendars Sue should order to maximize expected profits (6) Given the following list of items, (a) Calculate the annual usage cost of each item. (b) Classify the items as A, B, or C. Item Annual Usage ($) Item Classification 101 102 103 104 105 201 202 203 204 205 (7) Tax Preparers Inc. works 250 days per year. The company uses adding machine tape at a rate of eight rolls per day. Usage is believed to be normally distributed with a standard deviation of three rolls during lead time. The cost of ordering the tape is $10 and holding costs are $0.30 per roll per year. Lead time is two days. (a) Calculate the economic order quantity (Round your answer to 1 decimal place, the tolerance is +/-0.1.) (b) What reorder point will provide an order cycle service level of 97 percent? tapes (Round up your answer to the nearest whole number.) (c) How much safety stock must the company hold to have a 97 percent order-cycle service level? units (Round your answer to 2 decimal places, the tolerance is +/-0.01.) (d) What reorder point is needed to provide an order-cycle service level of 99 percent? tapes (Round up your answer to the nearest whole number.) (e) How much safety stock must the company hold to have a 99 percent order-cycle service level? units (Round your answer to 2 decimal places, the tolerance is +/-0.01.) (8) The BackPack Company produces a line of backpacks. The manager, Jill Nicholas, has decided that the BackPack Company must have very good customer service. She has asked you to develop a level aggregate plan using inventories but not back orders. All demand must be met each period. Use the following data to solve the problem: Problem Data Cost data Regular-time labor cost per hour $10.00 Overtime labor cost per hour $15.00 Subcontracting cost per unit (labor only) $84.00 Holding cost per unit per period $10.00 Back-order cost per unit per period $20.00 Hiring cost per employee $600.00 Firing cost per employee $450.00 Capacity data Beginning workforce 210 employees Beginning inventory 400 units Labor standard per unit 6 hours Regular time available per period 160 hours Overtime available per period 32 hours Subcontracting maximum per period 1000 units Subcontracting minimum per period 500 units Demand data Period 1 6000 units Period 2 4800 units Period 3 7840 units Period 4 5200 units Period 5 6560 units Period 6 3600 units You must: A. Calculate the aggregate production rate: units (Round your answer to 0 decimal places, the tolerance is +/-1.) B. Calculate the appropriate workforce given the aggregate production rate: employees C. Show what would happen if this plan were implemented. Period Plan 1 2 3 4 5 6 Total Demand net of beginning 4800 7840 5200 6560 3600 inventory Period production (units) (If the answer is void please enter 0, do not leave any fields blank.) D. Calculate the costs of this plan. Regular-time labor cost $ Inventory holding cost $ Back order cost $ Hiring cost $ Firing cost $ Total cost $ (If the answer is void please enter 0, do not leave any fields blank.) (9) Although the BackPack Company has always used a level aggregate plan, Jill is interested in evaluating chase aggregate plans also. She has calculated how many hires and fires would be necessary to adjust capacity to meet demand exactly each period. Use the following data to solve the problem. Problem Data Cost data Regular-time labor cost per hour $10.00 Overtime labor cost per hour $15.00 Subcontracting cost per unit (labor only) $84.00 Holding cost per unit per period $10.00 Back-order cost per unit per period $20.00 Hiring cost per employee $600.00 Firing cost per employee $450.00 Capacity data Beginning workforce 210 employees Beginning inventory 400 units Labor standard per unit 6 hours Regular time available per period 160 hours Overtime available per period 32 hours Subcontracting maximum per period 1000 units Subcontracting minimum per period 500 units Demand data Period 1 6000 units Period 2 4800 units Period 3 7840 units Period 4 5200 units Period 5 6560 units Period 6 3600 units Period 1 2 3 4 5 6 Total Employees Needed 210 180 294 195 246 135 1260 Now Jill wants to see how the plan would actually work. You need to: A. Show what would happen if this plan were implemented. Period Plan 1 2 3 4 5 6 Total Demand 4800 7840 5200 6560 3600 Employee s Hires Fires B. Calculate the costs associated with this plan. Hiring Cost $ Firing Cost $ Regular-time labor Cost $ Total Cost $ (10) Problem Data Cost data Regular-time labor cost per hour $10.00 Overtime labor cost per hour $15.00 Subcontracting cost per unit (labor only) $84.00 Holding cost per unit per period $10.00 Back-order cost per unit per period $20.00 Hiring cost per employee $600.00 Firing cost per employee $450.00 Capacity data Beginning workforce 210 employees Beginning inventory 400 units Labor standard per unit 6 hours Regular time available per period 160 hours Overtime available per period 32 hours Subcontracting maximum per period 1000 units Subcontracting minimum per period 500 units Demand data Period 1 6000 units Period 2 4800 units Period 3 7840 units Period 4 5200 units Period 5 6560 units Period 6 3600 units Jill Nicholas believes there must be a better aggregate plan. She has suggested a hybrid plan, using a permanent workforce of 195 employees and subcontracting the backorder as needed. Once again, Jill has requested that you provide the following information: A. Calculate the regular-time production possible each period given a workforce of 195 B. Show what would happen if this plan were implemented. Period Plan 1 2 3 4 5 6 Total Demand 4800 7840 5200 6560 3600 Regular-time production units Subcontractin g Ending Inventory Backorder Units (If the answer is void please enter 0, do not leave any fields blank.) C. Calculate the costs associated with this plan. Regular-time production cost $ Subcontracting cost $ Ending Inventory Cost $ Backordering Cost $ Firing Cost $ Total Cost $ (11) The Draper Tax Company provides tax services to local businesses. Draper chooses to meet all demand as it occurs because customers are unwilling to accept back orders. The company has provided the following cost, capacity, and demand information. Draper Tax Company Problem Data Cost data Regular-time labor cost per hour $25.00 Overtime labor cost per hour $37.50 Temporary worker cost per hour $40.00 Hiring cost per permanent worker $2000.00 Firing cost per permanent worker $1200.00 Backorder cost $500.00 Capacity data Beginning workforce 12 employees Labor standard per service 12 hours Regular-time hours per period 40 hours Overtime hours per period 8 hours Demand data Week 1 48 clients Week 4 40 clients Week 2 36 clients Week 5 38 clients Week 3 50 clients Week 6 48 clients Calculate the size of the workforce needed for the company to meet average weekly demand. Assume that no overtime is used. (12) The Draper Tax Company provides tax services to local businesses. Draper chooses to meet all demand as it occurs because customers are unwilling to accept back orders. The company has provided the following cost, capacity, and demand information. Draper Tax Company Problem Data Cost data Regular-time labor cost per hour $25.00 Overtime labor cost per hour $37.50 Temporary worker cost per hour $40.00 Hiring cost per permanent worker $2000.00 Firing cost per permanent worker $1200.00 Backorder cost $500.00 Capacity data Beginning workforce 12 employees Labor standard per service 12 hours Regular-time hours per period 40 hours Overtime hours per period 8 hours Demand data Week 1 48 clients Week 4 40 clients Week 2 36 clients Week 5 38 clients Week 3 50 clients Week 6 48 clients Develop a level aggregate plan for the Draper Company if no back orders are permitted. A. Show what would happen if this plan were implemented. Week Plan 1 2 3 4 5 6 Total Number 48 36 50 40 38 48 260 of Clients Service hours Needed Regular- time Hours Undertim e Hours (If the answer is void please enter 0, do not leave any fields blank.) B. Calculate the costs associated with this plan. Regular-time labor Cost $ Hiring Cost $ Total Cost $ (13) The Draper Tax Company provides tax services to local businesses. Draper chooses to meet all demand as it occurs because customers are unwilling to accept back orders. The company has provided the following cost, capacity, and demand information. Draper Tax Company Problem Data Cost data Regular-time labor cost per hour $25.00 Overtime labor cost per hour $37.50 Temporary worker cost per hour $40.00 Hiring cost per permanent worker $2000.00 Firing cost per permanent worker $1200.00 Backorder cost $500.00 Capacity data Beginning workforce 12 employees Labor standard per service 12 hours Regular-time hours per period 40 hours Overtime hours per period 8 hours Demand data Week 1 48 clients Week 4 40 clients Week 2 36 clients Week 5 38 clients Week 3 50 clients Week 6 48 clients Develop a chase aggregate plan for Draper using a permanent workforce of twelve employees supplemented by overtime. All demand must be met each period. A. Show what would happen if this plan were implemented. Week Plan 1 2 3 4 5 6 Total Number of 48 36 50 40 38 48 260 Clients Service hours Needed Number of Employee s Regular- time Hours Over time hours Under- time Hours (If the answer is void please enter 0, do not leave any fields blank.) B. Calculate the costs associated with this plan. Regular-time labor Cost $ Overtime Cost $ Total Cost $ (14) W. C. Sanders, owner of Fort Engines, a producer of heavy-duty snow blower engines, needs to develop an aggregate plan for the coming year. The company currently uses twenty individuals working 160 regular-time hours each month. Each worker is capable of producing ten heavy-duty snow blowers per month. Employees are paid $12 per hour. Overtime is limited to a maximum of 40 hours per month per employee. Overtime costs are $18 per hour. Holding costs are $5 per unit per period. Back-order cost is $10 per unit per period. The beginning inventory is 40 units. Monthly demand projections are: Month Demand (units) Month Demand (units) January 250 July 220 February 230 August 220 March 190 September 260 April 170 October 260 May 200 November 240 June 220 December 220 A. Develop a hybrid aggregate plan using the initial workforce supplemented by overtime. If demand in any period exceeds regular-time production plus overtime production plus any beginning inventory, the company will use back orders. Calculate the cost of this plan. Regular Overtime Month Demand production production Inventory Backorder Jan Feb 230 Mar 190 Apr 170 May 200 June 220 July 220 Aug 220 Sept 260 Oct 260 Nov 240 Dec 220 Total (If the answer is void please enter 0, do not leave any fields blank.) Regular labor Cost $ Overtime Labor Cost $ Holding Cost $ Backorder Cost $ Total Cost $ B. Another alternative is to try a level plan that uses inventory and overtime to absorb fluctuation. Calculate the cost of this plan if overtime units are averaged over the 12 months for the production process. Assume no back orders are used. Total Demand Regular production Overtime production Inventory Backorder Total Regular labor Cost $ Overtime Labor Cost $ Holding Cost $ Total Cost $ C. A third alternative being considered is to use a level plan but also to close down the facility for the entire month of July. Overtime, inventory, and back orders can be used. Calculate the cost of this plan. Assume that the total required overtime units are averaged over the year (except July) for the production process. Total Demand Regular production Overtime production Inventory Backorder Total Regular labor Cost $ Overtime Labor Cost $ Holding Cost $ Backorder Cost $ Total Cost $