Exercises

Ch.12-14

OSCM a.a. 2015-2016

 Exercise1: EOQ
A toy distributor is offering quantity discounts for board
games as follows:
Order qty (games) Price per game
0-50 $10.00
51-100 $9.00
100+ $8.00

Fleetwood Games estimates its annual demand from this

distributor at 680, its ordering costs are $10 and its annual
holding costs at 25% of the games price.
a) Does the order quantity of 100+ give a feasible EOQ? If
not, what price level does give a feasible EOQ?
b) Which price level gives the lowest total cost of the
inventory?
OSCM a.a. 2015-2016
 Solution (a)
a)
D=680
Co=10$
Ch=0,25*price

EOQ 8.00$=(2*10* 680/(0,25*8))=(13600/2)=6800=82,46 (not
feasible)

EOQ 9.00$=(2*10* 680/(0,25*9))=(13600/2,25)=6044,4=77,75

(feasible)

EOQ 10.00$=(2*10* 680/(0,25*10))=(13600/2,5)=5440=73,76 (not

feasible)

OSCM a.a. 2015-2016
 Solution (b)

b)
Ctot8.00$= Ch*EOQ/2+Co*D/EOQ=
(0,25*8)*(100/2)+10*(680/100)=
2*50+10*6,8=$168

Ctot9.00$=(0,25*9)*(77,75/2)+10*(680/77,75)=
2,25*38,875+10*8,75=$174,97

Ctot10.00$=(0,25*10)*(50/2)+ 10*(680/50)=
2,5*25+10*13,6=$198,5

OSCM a.a. 2015-2016
 Exercise 2: EOQ

Donningtons Ltd has a steady demand for 350

retro globes each year. Orders are calculated to
cost $5 and the annual cost of holding stock is
estimated at $15 per item. If the globe supplier has
a minimum order size of 25 globes, how much
more does it cost Donningtons Ltd relative to the
optimum EOQ?
How many globes should the company order at a
time if demand increases drastically to 1600 and
the cost of ordering falls from $5 to $4?

OSCM a.a. 2015-2016

 Solution
D=350 globes per year
Co=$5
Ch=$15
Minimum order size=25 globes

EOQ=

Optimum Ctot=Ch*EOQ/2 + Co*D/EOQ=
15*15,28/2+5*350/15,28=
114,6+114,6=$229,2

For 25 items, Ctot= Ch*EOQ/2 + Co*D/EOQ=

15*25/2+5*350/25=
187,5 + 70= $257,5
OSCM a.a. 2015-2016
 Solution

New Demand=1600
New Co=$4

OSCM a.a. 2015-2016

 Exercise 3: EBQ

A glass factory produces 4 different glass types on

a single process line. It costs 1000 every time
production is switched, due to cleaning and re-
setting, monthly stock holding costs are estimated
at 0,3 per item and monthly demand is estimated
at 400 000 per item. The factory works an average
of 28 days per month and 20 hours per day. The
process rate per hour of production is 5000 items.
Determine the EBQ.

OSCM a.a. 2015-2016

 Solution

Co=1000
Ch=0,3 per item
Production process= 28days x 20hours
Dmonthly= 400 000
P=5000 items per hour
Dhourly= 400 000/(28*20)=714 per hour

OSCM a.a. 2015-2016

 Exercise 5: Re-order level

Greys Corp. has a daily average demand of 700

wind turbines, a 5-day lead time and a normally
distributed demand pattern with standard
deviation of 50. The company wants a service level
of 95%(z value=1.65). What is the re-order level in
this situation?

OSCM a.a. 2015-2016

 Solution

D=700 turbines per day

LT=5 days
= 50
z-value=1,65

ROL=*LT+z
= 700*5+ 50*1,65=3.500+82,5=3.582,5

OSCM a.a. 2015-2016

 MPS and ATP (1)

In the following, the bill of material of a phone:

Phone

Cases (2) Screen (1) Mechanics (4) So<ware (1)

Electronic Network
components card
(6)

OSCM a.a. 2015-2016

 MPS and APT

Demand and sales orders of the product Phone are the

following:
Week 1 2 3 4 5 6
Demand 2 3 7 8 2 12
Sales 1 0 3 0 2 4
Order

Please calculate MPS and ATP of the product Phone taking into consideration
that:
On-hand inventory = 8,
Safety stock= 5 (order is launched when inventory is < than safety stock)
Batch orders = 10,
Lead Time=1

OSCM a.a. 2015-2016

 MRP

Given the information about the phone and its

components reported in the following table,
calculate the MRP record of the code software
and the code electronic components.

Lead >me On-hand Batch size

(weeks) inventory
So<ware 0 12 8
Electronic 2 40 15
components

OSCM a.a. 2015-2016

 MPS and ATP

Week 1 2 3 4 5 6
Demand 2 3 7 8 2 12
Sales Order 1 0 3 0 2 4
Inventory 6 13 6 8 6 14
ATP 7 7 8 16
MPS 10 10 20
MPS planned 10 10 20

On-hand inventory=8
Safety Stock=5

OSCM a.a. 2015-2016

 Mrp

Software(1)
Week 1 2 3 4 5 6
Demand 10 0 10 0 20 0
Inventory 2 2 0 0 4 4
MRP 0 0 8 0 24 0

Electronic components (6)

Week 1 2 3 4 5 6
Demand 0 0 48 0 144 0
Inventory 40 40 7 7 13 13
MRP 15 0 150 0 0 0

OSCM a.a. 2015-2016

 MPS and ATP (2)

In the following, the bill of material of a projector:

PROJECTOR

BuXons (4) Case(1) Cable (3)

PlasYc Network
card (2) So<ware(1)
container (2)

Controller(1) Wires (3)

OSCM a.a. 2015-2016

 MPS and APT

Demand and sales orders of the product Projector are the

following:
Week 1 2 3 4 5 6
Demand 1 7 7 4 2 6
Sales 1 1 2 3 4 1
Order

Please calculate MPS and ATP of the product Projector taking into
consideration that:
On-hand inventory = 5,
Safety stock= 3 (order is launched when inventory is < than safety stock)
Batch orders = 6,
Lead Time=0

OSCM a.a. 2015-2016

 MPS and ATP

Week 1 2 3 4 5 6
Demand 1 7 7 4 2 6
Sales Order 1 1 2 3 4 1
Inventory 4 3 8 4 8 8
ATP 4 5 7 2 5
MPS 6 12 6 6

On-hand inventory=5
Safety Stock=3

OSCM a.a. 2015-2016

 MRP

Given the information about the projector and its

components reported in the following table,
calculate the MRP record of the code software
and the code electronic components.

Lead >me Safety lead On-hand Batch size

(weeks) >me (weeks) inventory
case 1 1 7 4
Network card 1 0 25 7
wires 0 1 20 20

OSCM a.a. 2015-2016

 Mrp

Case (1)
Week 1 2 3 4 5 6
Demand 0 6 12 0 6 6
Inventory 7 1+12=13 1 1+8=9 3+4=7 1
MRP 12 8 4

Network card (2)

Week 1 2 3 4 5 6
Demand 24 0 16 8 0 0
Inventory 1 1 6 5 5 5
MRP 21 7

OSCM a.a. 2015-2016

 Mrp

Wires (3)
Week 1 2 3 4 5 6
Demand 0 63 21 0 0 0
Inventory 20+60=80 17+20=37 16 16 16 16
MRP 60 20 0 0 0 0

OSCM a.a. 2015-2016