29 Jul DETERMINE AS ASSIGNMENT PLAN THAT WILL MINIMIZE COSTS.
The factory (Bikes R Us) procures all the
components and parts from domestic suppliers. Usually the factory, wholesaler,
and the retailer work one shift per day and have 250 work days each year with
uniform production rate. The bikes are sold to retailers for $ 300.00 per unit
and it costs the company $ 200.00 to produce each unit including all labor and
overhead.
Ordering cost at LaserPed is estimated to
be $ 30 per order and inventory carrying cost (includes space, capital cost) is
estimated to be about 25% per year.
As the Operations Manager of LaserPed, you
have to find the following:
How many Deluxe A bikes should LaserPed order in 2014? [1
point}
What should be the optimal lot size for each order (economic
order quantity) for this model?
How much inventory of Deluxe A bikes will the company
(LaserPed) carry in stock on average if they order EOQ? How many orders
should LaserPed place annually
Find annual (ordering+ inventory carrying) cost?
What should be the reorder point if the lead time is 10 days?
2. A recent Business Analyst (GW BBA) hired
to streamline supply chain found that LaserPed’s daily demand for bikes
actually follows an approximate normal distribution with mean 20 units and
standard deviation of 5 units. She negotiated a fixed lead time of 5 days with
the wholesaler and wanted to provide a service level of 99%. (z value for 99%
is 2.36)
a)
Given the above information and
data in Problem no. 1 above, would you change your ordering pattern? Why?
b)
What would be the new reorder
point?
c)
What would be the new average
inventory?
d)
What would be the safety stock?
e) To improve
inventory performance, the Business Analyst at LaserPed decided to directly
source bikes from the manufacturer (BikesRUs) and link their demand with
BikesRUs production plans. BikesRUs can produce bikes at a rate of 400 per day,
setup cost is $ 400 per setup, and annual inventory carrying cost is 25% of the
cost of bike. The analyst was able to
negotiate a lower cost of $ 240 per bike in exchange for long term orders. What
would be the economic production quantity? [6 points] What would be the maximum
inventory? [2 points] What would be the production run time and total cycle
time (time between two successive production runs)?
The
following table contains information on the cost to run three jobs on four
available machines. Determine as assignment plan that will minimize costs.
[12 points] What will be the minimum cost?
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