Reference no: EM131438100

ADVANCED SUPPLY CHAIN MANAGEMENT

1. Dry Ice, Inc., is a manufacturer of air conditioners that has seen its demand grow significantly.  The company anticipates nationwide demand for the next year to be 180,000 units in the South, 120,000 units in the Midwest, 110,000 units in the East, and 100,000 units in the West. Managers at Dry Ice are designing the manufacturing network and have selected four potential sites - New York, Atlanta, Chicago, and San Diego. Plants could have a capacity of either 200,000 or 400,000 units.  The annual fixed cost at the four locations are shown in the table below, along with the cost of producing and shipping an air conditioner to each of the four markets.  What site would be the lowest cost to operate?  The highest?  What is the total cost of operating the entire system?

	New York	Atlanta	Chicago	San Diego
Annual fixed cost of 200,000 plant	$6 million	$5.5 million	$5.6 million	$6.1 million
Annual fixed cost of 400,000 plant	$10 million	$9.2 million	$9.3 million	$10.2 million
East	$211	$232	$238	$299
South	$232	$212	$230	$280
Midwest	$240	$230	$215	$270
West	$300	$280	$270	$225

2. The following table gives the distances between Boston, Chicago, Dallas, Los Angeles, and Miami. Each city requires 40,000 kilowatt hours (kWh) of power, and Chicago, Dallas, and Miami are capable of producing 70,000 kWh. Assume that shipping 1000kWh over 100 miles costs $4.00. What would be the total shipping cost? From where should power be sent to minimize the cost of meeting each city's demand?

	Boston	Chicago	Dallas	Los Angeles	Miami
Chicago	983	0	1205	2112	1390
Dallas	1815	1205	0	801	1332
Miami	1539	1390	1332	2757	0

3. Gray's Pharmacy uses a periodic review inventory system.  Every Friday the pharmacist reviews her inventory and determine the size of the replenishment order.  For example, she knows that demand for 500 mg metformin tablets, a drug for diabetics, is normally distributed with a mean of 6000 tablets each week with a standard deviation of 500 tablets per week. Lead time is three weeks. The desired cycle-service level is 95 per cent. There are currently no outstanding orders.

a) Calculate the required safety stock.

b) Calculate the target inventory level.

c) If, when she reviews her inventory of metformin, the pharmacist finds that she currently has 19,000 tablets, calculate the appropriate replenishment order quantity. 

4. A popular spice company, Cincinnati Seasonings, located in Cincinnati, Ohio has experienced a large demand in the eastern part of the United States. The CEO has decided to set up another plant to serve its eastern market. There are three factories that could possibly be used in Hershey, PA, Philadelphia, PA, and Baltimore, MD. The markets are located in Bangor, Maine, Boston, MA, Providence, RI, Pittsburgh, PA and New York, NY. The coordinate location, the demand in each market, the required supply from each factory, and the shipping cost for each supply source or market is provided in the table below. Where would an optimal factory (based upon minimal total cost) be built?  You need not provide city name only rectilinear distance (x,y) coordinates.

	Transportation Cost per pound	Demand (in pounds)	X Coordinate	Y Coordinate
Sources
Hershey PA	$1.50	1500	650	20
Philadelphia	$1.25	1200	680	50
Baltimore	$1.10	1000	780	68
Markets
Bangor	$2.00	860	1250	1050
Boston	$2.00	1020	810	940
Providence	$2.00	980	800	900
Pittsburgh	$2.00	950	450	20
New York	$2.00	675	650	875

5. Jeff Corporation is a metalworking shop that is redesigning its layout.  The from - to matrix of the number of trips between departments is shown below.

Trips Between Departments

Department	A	B	C	D	E	F
A		10	15			50
B				20	10	20
C				45		10
D						20
E
F

The current layout is shown below.  Propose a new layout based upon the finding of your calculations.

A	B	C
D	E	F

Hint; Calculate load distance requirements for travel between departments for both existing and proposed layouts.  Use 1 for distance between adjacent blocks (i.e., A -> B = 1; A -> C = 2)