Mgt314

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 = 300+ Zsigmadlt=300+2.33*30=369.9

II) Safety stock= Zsigmadlt=2.33*30=69.9

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 |