# Mgt314

Pages: 10 (1514 words) Published: May 28, 2013
Individual Assignment

Assignment # 03

Prepared for
Kanchan Das, Ph.D.
Course Instructor
Operations Management (MGT-314)
Summer-2012

Prepared by

Md. Tanvir Rahman Mazumder
0930-319-030

Date of Submission: 30-07-2012

Question from chapter 12

1. a

i) Annual demand= 40*260=10400 boxes

Q*= (2DS/H) ^0.5= (2*10400*\$60/30) ^0.5= 203.96

Ii) TC= (Q/2)*H+ (D/Q)*S= (203.96/2)*\$30+ (10400/203.96)*\$60 =\$3059.4+\$3059.4 TC =\$6118.8 Iii) EOQ= (Q/2)*H+ (D/Q)*S= (203.96/2)*\$30+ (10400/203.96)*\$60 = \$3059.4 + \$3059.4=\$6118.8

So, except for rounding annual ordering cost and carrying cost equal at the EOQ.

IV) TC200= (200/2)*\$30+ (10400/200)*60=\$3000+\$3120=\$6120

Office manager should not use the optimal order size instead of 200 boxes because it is 1.2 higher than with EOQ. So 200 boxes is acceptable.

1. b

Given that,
Expected demand during lead time= 300 units

Sigma dlt=30 units

I) ROP= Average demand during lead time+ safety stock

III) If 2% risk is require than
Safety stock= 2.05*30=61.5
If risk 2% stock out is require than safety stock will be 61.5 and risk 1% stock out is require than safety stock will be 69.9. So risk 2% stock out require less safety stock than 1% stock out.

ROP= 300+ 61.5= 361.5

When risk is 1% then ROP was 369.9 and when risk is 2% then ROP is 361.5. So ROP is smaller if the acceptable risk was 2% instead of 1%.

ROP= 300+ 61.5= 361.5

Question from chapter 13
I)
Month| 1| 2| 3| 4| 5| 6| 7| 8| Total|
Forecast| 120| 135| 140| 120| 125| 125| 140| 135| 1040| Output| | | | | | | | | |
Regular| 120| 130| 130| 120| 125| 125| 130| 130| 1010| Overtime| 0| 5| 10| | | | 10| 5| 30|
subcontract| | | | | | | | | |
Output-Forecast| | | | | | | | | |
Inventory| | | | | | | | | |
Beginning| | | | | | | | | |
Ending| | | | | | | | | |
Average| | | | | | | | | |
Backlog| | | | | | | | | |
Costs:| | | | | | | | | |
Regular@\$60| \$7200| 7800| 7800| 7200| 7500| 7500| 7800| 7800| \$60600| Overtime@\$90| \$0| 450| 900| 0| 0| 0| 900| 450| \$2700| Subcontract| | | | | | | | | |
Inventory@\$2| | | | | | | | | |
Backlog| | | | | | | | | |
Total| \$7200| \$8250| \$8700| \$7200| \$7500| \$7500| \$8700| \$8250| \$63300|

II)

Month| 1| 2| 3| 4| 5| 6| 7| 8| Total|
Forecast| 120| 135| 140| 120| 125| 125| 140| 135| 1040| Output| | | | | | | | | |
Regular| 130| 130| 130| 130| 130| 130| 130| 130| 1040| Overtime| 0| 0| 0| 0| 0| 0| 0| 0| 0|
subcontract| 0| 0| 0| 0| 0| 0| 0| 0| 0|
Output-Forecast| 10| -5| -10| 10| 5| 5| -10| -5| | Inventory| | | | | | | | | |
Beginning| 0| 10| 5| 0| 5| 10| 15| 5| 50|
Ending| 10| 5| 0| 5| 10| 15| 5| 0| 50|
Average| 5| 7.5| 2.5| 2.5| 7.5| 12.5| 10| 2.5| 50| Backlog| | | 5| | | | | | 5|
Costs:| | | | | | | | | |
Regular@\$60| \$7800| 7800| 7800| 7800| 7800| 7800| 7800| 7800| \$62400| Overtime@\$90| | | | | | | | | |
Subcontract| | | | | | | | | |
Inventory@\$2| \$10| 15| 5| 5| 15| 25| 20| 5| \$100| Backlog@\$90| | | \$450| | | | | | \$450|
Total| | | | | | | | | \$62950|
So plan b is cheaper than from plan a.

2b. i)
* The cost of hiring and lying off workers and using overtime is practically eliminated.

* The cost of locating and developing of new...