Operational Management
Tutorial Exercises
Inventory Management
1. Charlie’s Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive. Charlie’s Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 30 pounds. Charlie’s prides itself on offering only the best¬ quality ingredients and a high level of service, so it wants to ensure a 98% probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 500 pounds of pepperoni in the walk-¬in cooler. How many pounds of pepperoni would you order? (Hint: 98%servicelevel implies z=2.05)
2. Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolinear chips. The trip will take Data about two days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of five per day (seven days per week) with a standard deviation of demand of one per day. He needs a 98% service probability. If he currently has 35 chips in inventory, how many should he order? What is the most he will ever have to order?
3. Annual demand for a product is 13,000 units; weekly demand is 250 units with a standard deviation of 400 units. The cost of lacing an order is $100, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.65 per unit. To provide a 98 percent service probability, what must the reorder point be?
Suppose that the production manager is told to reduce the safety stock of this item by 100units. If this is done, then what will the new service probability
Inventory Management
1. Charlie’s Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive. Charlie’s Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 30 pounds. Charlie’s prides itself on offering only the best¬ quality ingredients and a high level of service, so it wants to ensure a 98% probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 500 pounds of pepperoni in the walk-¬in cooler. How many pounds of pepperoni would you order? (Hint: 98%servicelevel implies z=2.05)
2. Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolinear chips. The trip will take Data about two days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of five per day (seven days per week) with a standard deviation of demand of one per day. He needs a 98% service probability. If he currently has 35 chips in inventory, how many should he order? What is the most he will ever have to order?
3. Annual demand for a product is 13,000 units; weekly demand is 250 units with a standard deviation of 400 units. The cost of lacing an order is $100, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.65 per unit. To provide a 98 percent service probability, what must the reorder point be?
Suppose that the production manager is told to reduce the safety stock of this item by 100units. If this is done, then what will the new service probability