Reference no: EM131071360

Question 1. Castergourd Home Products makes two types of butcher-block tables: the Beefeater and the Deutschlander. The two tables are made in the same facility and require the same amount of labor and equipment. In addition, we know the following:

- Each table costs $300 to make, and each requires, on average, 3.2 hours of labor.
- Each employee works 160 hours per month, and there is no effective limit on the number of employees.
- The cost of hiring or laying off an employee is 5300.
- The monthly holding cost for a table is $15.
- For planning purposes, Castergourd will begin and end with 20 employees and 0 tables in inventory.

Forecasted sales for the tables are as follows:

MONTH	BEEFEATER	DEUTSCHLANDER
November 2012	650	3,048
December	676	2,899
January 2013	624	3,198
February	624	2,671
March	696	2,919
April	475	3,102
May	566	2,964
June	819	2,409
July	754	3,381
August	982	3,965

a. Develop a top-down level production plan for Castergourd for the 10-month planning period. Calcu¬late the total production, hiring, layoff, and inventory costs for your plan.

b. Repeat part a, except in this case develop a chase production plan.

C. Suppose hiring and layoff costs increase dramati-cally. In general, will this make a level plan look better or worse than a chase plan? Explain.

Question 2. Ollah's Organic Pet Shop sells about 4,500 bags of free-range dog biscuits every year. The fixed ordering cost is $20, and the cost of holding a bag in inventory for a year is 53. What is the economic order quantity for the biscuits?

Question 3. Suppose Ollah's decides to order 300 bags at a time. What would the total ordering and holding costs for the year be? (For this problem, don't consider safety stock when calculating holding costs.)

Question 4. Average weekly demand for free-range dog biscuits is 60 bags per week, with a standard deviation of 16 bags. Ollah uses a continuous inventory review system to manage inventory of the biscuits. Ollah wants to set the reorder point high enough that there is only a 5% chance of running out before the next order comes in. Assuming that the lead time is a constant 3 weeks, what should the reorder point be?

Question 5. Suppose Ollah decides to use a periodic review system to manage the free-range dog biscuits, with the vendor checking inventory levels every week. Under this scenario, what would the restocking level be, assuming the same de¬mand and lead time characteristics listed in problem 13 and the same 95% service level? (Note that because the standard deviation of weekly demand is 16, basic statistics tells us this standard deviation of demand over 4 weeks will be √4 X 16 = 32.)

Question 6. Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyer's choice). The supplier has offered 011ah the following terms:

Order 1-124 bags, and the price is $6.00 a bag. Order 125 or more bags, and the price is 55.00 a bag.

Annual demand is 700, fixed ordering costs are $10 per order, and the per-bag holding cost is estimated to be around 53 per year.

a. What is the economic order quantity for the bags?

b. What order quantity should 011ah order, based on the volume discount? Is this different from the EOQ? If so, how could this be?

c. Suppose the lead time for bags is a constant 3 weeks, and average weekly demand is 14 bags, with a standard deviation of 3.2 bags. If 011ah wants to maintain a 98% service level, what should her reorder point be?

Question 7. Complete the following master schedule record.

On- hand inventory at end of week 1: 100
Week	2	3	4	5	6	7	8	9
forecasted demand	270	250	310	100	140	350	300	250
Booked orders	265	260	270	255	260	265	180	160
Projected ending inventory
Maaster production schedule	500		600		700		500
Available to promise							160

Question 8. Complete the following master record. All gross requirements, beginning inventory level, and scheduled receipts are shown.

WEEK		1	2	3	d	5	6
	Gross requirements	300	300	300	200	250	250
LT (weeks) = 2	Scheduled receipts		260
	Projected ending inventory: 360
	Net requirements
Mln. order = 1	Planned receipts
	Planned orders

Question 9. The following figure shows the bill of material (BOM) for the Acme PolyBob, a product that has proven unsuccessful in capturing roadrunners. Complete the MRP records. All the information you need is shown in the BOM and on the MRP records.

Item B: Lead time = I week; Minimum order quantity =

WEEK	1	2	3	4	5	6
Gross requirements		250	300	300	300	200
Scheduled receipts
Projected ending inventory: 0
Net requirements
Planned receipts
Planned orders

Item 0 Lead time = 3 weeks; Minimum order quantity = 500

WEEK	1	2	3	4	5	6
Gross requirements			600
Scheduled receipts		500
Projected ending inventory:0
Net requirements
Planned receipts
Planned orders

Question 10. Consider the following information:

Demand rate (D) = 450 units per hour

Lead time (7) au 5 hours

Container capacity (C) = 60 units

Safety factor (x) = 10%

a. How many kanban production cards are needed?

b. How many hours' worth of demand will these cards represent?

c. Suppose the lead time is reduced to three hours. Will this make any difference in the inventory levels? Show your work.

Question 11. Consider the following information:

Demand rate (D) = 1,500 units per hour Lead time (T) = 3 hours

Container capacity (C) = 300 units

Safety factor (x) = 15%

a. How many kanban production cards are needed?

b. How many hours' worth of demand will these cards represent?

C. Suppose the safety factor is eliminated. Will this make any difference in the inventory levels? Would this be a wise thing to do? Show your work.