Quiz #9-2021S - OM PDF

Preview

Summary

OM...

Description

Quiz #9 (to be sent until Wednesday, May 19, 5:00 PM) 1. A local shop has a relatively stable demand for tins of sweetcorn throughout the year, with an annual total of 1400 tins. The cost of placing an order is estimated at £15 and the annual cost of holding inventory is estimated at 25 per cent of the product’s value. The company purchases tins for 20p. How much should the shop order at a time, and what is the total cost of the plan? Answer : - How much should the shop order at a time = SQRT{(2X15 X1400) /(.25X20)}= 91.65151 - Total cost = ((.25X91.65)/2) +(25X1400)/91.65) = 393.3 2. A fruit canning plant has a single line for three different fruit types. Demand for each type of tin is reasonably constant at 50,000 per month (a month has 160 production hours). The tinning process rate is 1,200 per hour, but it takes 2 hours to clean and re-set between different runs. The cost of these changeovers (Co) is calculated at £250 per hour. Stockholding is calculated at $0.1 per tin per month. How big should the batch size be? Answer -How big should the batch size be - First we need to calculate demand per hour = 50000 / 160 = 312.5 ANSWER : SQRT {(2x250X50000) / (0.1X(1- (312.5/1200)))}= 18385.54 3. ‘Our suppliers often offer better prices if we are willing to buy in larger quantities. This creates a pressure on us to hold higher levels of stock. Therefore, to find the best quantity to order we must compare the advantages of lower prices for purchases and fewer orders with the disadvantages of increased holding costs. This means that calculating total annual inventory related costs should now not only include holding costs and ordering costs, but also the cost of purchased items themselves’ (Manager, Tufton Bufton Port Importers Inc.). One supplier to Tufton Bufton Port Importers Inc. (TBPI) has introduced quantity discounts to encourage larger order quantities. The discounts are shown below: Order quantity Price per bottle 1-100

€15.00

102-250

€13.50

250+

€11.00

TBPI estimates that its annual demand for this particular wine is 1500 bottles, its ordering costs are €30 per order, and its annual holding costs are 20 per cent of the bottle’s price. (a) How should TBPI go about deciding how many to order? (b) How many should they order? A

order quantity

Price per bottle

N. of batchs

annual order cost

annual holding cost

total cost

50

15

30

900

75

975

100

15

15

450

150

600

150

13.5

10

300

202.5

502.5

200

13.5

7.5

225

270

495

250

13.5

6

180

337.5

517.5

300

11

5

150

330

480

OR

order quantity

Price per bottle

N. of batchs

annual purchasin g cost

annual order cost

annual holding cost

total cost

AVG Total cost

50

15

30

22500

900

75

23475

15.65

100

15

15

22500

450

150

23100

15.4

150

13.5

10

20250

300

202.5

20752.5

200

13.5

7.5

20250

225

270

20745

13.83

250

13.5

6

20250

180

337.5

20767.5

13.845

300

11

5

16500

150

330

16980

350

11

4.2857

16500

128.57

385

17013.57

13.835

11.32 11.34

B- How many should they order =SQRT((2*30*1500)/(0.2*11))= 202.26

4. Walsh Construction is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 8%, and the probability of a "supereven" that would disable both at the same time is estimated to be 2.5%. Option 2 uses two suppliers located in different countries. Each has a "unique-event" risk of 18%, and the probability of a "super-event" that would disable both at the same time is estimated to be 1.2%. (a) What is the probability that both suppliers will be disrupted using option 1? (b) What is the probability that both suppliers will be disrupted using option 2? (c) Which option would provide the lowest risk of a total shutdown? Answer: (a) option 1 S = 0.025; U = 0.08 = 0.025 + (1 - 0.025)0.082 = 0.025 + 0.975(0.0064) = 0.03124 (b) option 2 S = 0.012; U = 0.18 = 0.012 + (1 - 0.012)0.182 = 0.012 + 0.988(0.0324) = 0.04401 (c) Answer : as per the above result the option 1 is low risk...