A B C D E

1 Exercise 9.1 - An EOQ Model for the ABC Company

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4 Annual Demand 1,200
5 Ordering Cost £9.00
6 Unit Cost
7 Unit holding cost per year (two options)
8 (i) in £s per year £0.10
9 (ii) as % of unit cost
10 User input cells are shaded purple
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12 Output
13 Unit holding cost per year £0.10
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15 EOQ 464.76
16 No. of Orders/Year 2.6
17 Total cost £46
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4 A quantity discount model for the ABC Company
5 DISCOUNT TABLE
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14 (i) Answer = 465
15 (ii) Answer = 500 at a cost of £586.60
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5 Unit Cost = £0.50 £0.45
6 Minmum discount quantity, Mini = 0 500
7 Annual unit holding cost = £0.10 £0.10
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9 Qi =464.8 464.8
10 Adjusted order quantities = 464.8 500.0
11 Total costs = £646.48 £586.60
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 A B C D E F G H
1 Exercise 9.2 - The PROQ Model and solution to the Acme Company's problem.
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3 Input User input cells are shaded purple
4 Annual Demand 6,500 Convert all units to annu
5 Setup Cost £180.00 Since an annual demand o
6 Unit Cost £5.50 equates to a daily demand
7 Annual production rate 15,600 deduced that the number
8 Unit holding cost per year (two options) per year is 6500/25 = 260.
9 (i) in £s per year production rate is 60 x 260
10 (ii) as % of unit cost 18.0%
11 Annual unit holding cost = £0.99
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13 Output
14 PROQ 2012.95 (i) Answer = 201
15 Production run time,Ro (in weeks) 6.71 (ii) Answer = 11
16 Optimal cycle time, To (in weeks) 16.10 (iii) Answer = 6.
17 Maximum inventory level 1174.2
18 Annual holding cost £581
19 Annual setup cost £581
20 Total cost £36,912
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Convert all units
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Since an annual 5 demand of 6500 units
equates to a daily
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deduced that 7the number of working days
per year is 6500/25
8 = 260. Thus the annual
production rate 9 is 60 x 260 = 15,600 units
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(i) Answer
14 = 2013 units
(ii) 15
Answer = 1174.2
(iii)16
Answer = 6.71 weeks
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 A B C D E F G H I
1 Exercise 9.3 - Maximising profits of the Gardening Today magazine
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3 Input Unit Cost, C = £0.90
4 Selling Price, S = £1.20 User input cells are shaded purple
5 Scrap value, V = £0.50
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8 Output <- Probabilities -> <-- Expected -->
9 Indiv. Cumul. profit, EPi
10 Demand, Di Pi CUMi Sales Profit
11 1 500 0.1 1 500 £150
12 2 600 0.15 0.9 590 £173
13 3 700 0.2 0.75 665 £186
14 4 800 0.25 0.55 720 £184
15 5 900 0.2 0.3 750 £165
16 6 1000 0.1 0.1 760 £132 3
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18 Optimal demand, Qo = 700 Maximum profit = £186 ANSWER
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ANSWER
 A B C D E F G H I
1 Exercise 9.4 - A quantity discount model for the New Products Company
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3 Input Annual Demand 4,000
4 Ordering Cost £500.00 User input cells
5 Unit holding cost per year (two options) are shaded purple
6 (i) in £s per year
7 (ii) as % of unit cost 10.0%
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9 DISCOUNT TABLE Unit Cost = £10.00 £9.70 £9.30
10 Minimum discount quantity, Mini = 0 1000 2500
11 Annual unit holding cost = £1.00 £0.97 £0.93
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13 Output Qi = 2000.0 2030.7 2073.9
14 Adjusted order quantities = 2000.0 2030.7 2500.0
15 Total costs = £42,000 £40,770 £39,163
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17 Minimum total cost is £39,163 2
18 Optimal order quantity is 2500.0
19 Cycle time is 32.5 weeks
 A B C D E F G H I J
1 Exercise 9.5 , part (i) - A deterministic EOQ Model with shortages - Bloggs Engineering
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3 Input Annual Demand 14,560
4 Setup/Ordering Cost £8.00 User input cells
5 Unit Cost £30.00 are shaded purple
6 Holding cost (two options)
7 (i) in £s per year £52.00
8 (ii) as % of unit cost
9 Shortage cost per unit per year £104.00
10 Unit holding cost per year = £52.00
11 (i) Answer:
12 Output Optimal order size, Qo 82.0 Optimal order quantity = 82
13 Maximum stock level 54.7 Back-order size = 27.3 (=28)
14 Back-order size 27.3 (Answer to part (ii) is given below)
15 No. of orders/year 177.6
16 Cycle time 0.3 weeks
17 Annual Costs……..……
18 Setup/ordering cost £1,420.91
19 Holding cost £947.27
20 Shortage cost £473.64
21 Purchase cost £436,800
22 Total cost £439,642
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24 Exercise 9.5, part (ii) - A service-level model for Bloggs Engineering
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26 Input - in consistent time units User input cells are shaded purple
27 Time (day, week, month, year) week Demand is normally-distributed
28 Ordering/Setup Cost £8.00 Mean = 280
29 Unit Cost £30.00 Standard deviation = 60
30 Holding cost (two options) Service Level %, SL = 95%
31 (i) in £s per week £1.00 Lead Time, Lt = 2 week
32 (ii) as % of unit cost
33 Unit holding cost per week = £1.00 52
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35 Output
36 Reorder level/point, R 700.0 Holding cost of safety stock £140
37 Order quantity, Q 66.9 Holding cost of normal stock £33
38 Safety stock 140.0 Ordering/setup costs £33
39 Total costs per week £207
40 (ii) Answer: Optimal order quantity, Q = 67
41 Reorder level, R = 700
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size = 27.3 (=28)
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part (ii) is given
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 A B C D E F G H I
1 Exercise 9.6 - A two-product inventory model for the Ajax Company
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3 Widget Gadget
4 Input Annual demand 5000 4000
5 Ordering cost £120.0 £200.0 User input cells
6 Holding cost £15.0 £10.0 are shaded purple
7 Storage reqmnts. (m3) 1.50 1.00
8 Profit £25.0 £20.0
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10 Widget Gadget Totals
11 EOQ 283 400
12 Average space requirements (m3) 212.1 200.0 412.1
13 Profit contribution £7,071 £8,000 £15,071
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16 ********** Scaling Factor = 0.85 (Set initially to 1.0) **********
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18 Widget Gadget Total Storage
19 EOQ 240 340 Storage Constraint
20 Average space requirements (m3) 180.2 169.8 350.0 350.0
21 Profit contribution £6,005 £6,794
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23 Objective: Maximize profits = £12,799
24 Increase in profit = £2,272
25 ANSWER
26 [1] Each order consists of 240 widgets and 340 gadets (cells E19:F19) to give a maximum
27 profit of £12,799 (cell H23).
28 [2] In order to FULLY meet annual demand, the Ajax Company would need storage space
29 of 412 m3 (see cell H12), which would increase its profit by £2,272 (see cell H24).
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32 Solver Parameters
33 Set Target Cell: H23
34 Equal to: Max
35 By Changing Cells: E16
36 Subject to Constraints: H20 <= I20 = Storage space constraint
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ls E19:F19) to give a 26
maximum
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pany would need storage28 space
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by £2,272 (see cell H24).
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 A B C D E F G H I J
1 Exercise 9.7 - A periodic review model
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3 User input cells are shaded purple
4 Input - in consistent time units Demand is normally-distributed
5 Time (day, week, month, year) week Mean = 200
6 Ordering/Setup Cost Standard deviation = 30
7 Unit Cost £300.00 Service Level %, SL = 98%
8 Holding cost (two options) Lead Time, Lt = 1
9 (i) in £s per week £2.00 Review Period = 0
10 (ii) as % of unit cost Stock On-hand = 0
11 Unit holding cost per week £2.00 52
12 Output
13 Reorder level/point, R 262.0 Holding cost of safety stock £124.00
14 Order quantity, Q 262.0 Holding cost of normal stock £262.00
15 Safety stock 62.0 Ordering/setup costs £0.00
16 Total costs pe week £386.00
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18 ANSWER
19 (i) Optimal order quantity = 262 at a weekly total cost of £386
20 (ii) When the ordering cost is £100, weekly total cost is £462.34
21 (iii) For a lead-time of 2 weeks, the order quantity is 488
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 A B C D E F G H
1 Exercise 9.8 - MeadowSweet Creameries: A probabilistic model with shortages
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3 Input User input cells are shaded purple
4 Holding cost, H = £2.00
5 Shortage cost, B = £2.40
6 B/(B + H) = 0.55
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8 Output <- Probabilities ->
9 Indiv. Sum
10 Demand, Di Pi SUMi
11 1 500 0.1 0.1
12 2 600 0.2 0.3
13 3 700 0.3 0.6 = Optimal amount
14 4 800 0.3 0.9
15 5 900 0.05 0.95
16 6 1000 0.05 1
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18 Answer: 700 units
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 A B C D E F G H
1 Exercise 9.9 - The Bedrock Company: A stockout model with shortages allowed
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3 Input Annual Demand 7,500
4 Setup/Ordering Cost £50.00
5 Unit Cost £20.00 User input cells
6 Holding cost (two options) are shaded purple
7 (i) in £s per year £10.00
8 (ii) as % of unit cost
9 Shortage cost per unit per year £15.00
10 Unit holding cost per year = £10.00
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12 Output Optimal order size, Qo 353.6
13 Maximum stock level 212.1
14 Back-order size 141.4
15 No. of orders/year 21.2
16 Cycle time 2.5 weeks
17 Annual Costs……..……
18 Setup/ordering cost £1,060.66
19 Holding cost £636.40
20 Shortage cost £424.26
21 Purchase cost £150,000
22 Total cost £152,121
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24 Answer: (i) 354 (ii) 2.5 weeks (iii) 212
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 A B C D E F G H I J K
1 Exercise 9.10 - An MRP model for Micros Unlimited
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3 The BOM Table User input cells are shaded purple
4 Part Number: Description BOM Id. No. of Lead On Planned
5 Level Code Units Time Hand Order
6 Microprocessor 0 1 1 1 60 Rel. Row
7 Monitor 1 1001 1 2 50 25
8 Keyboard 1 1002 1 1 100 25
9 CPU Assembly 1 1003 1 2 60 25
10 Motherboard 2 2001 1 1 100 55
11 Disk drive 2 2002 1 1 90 55
12 CD-ROM drive 2 2003 1 1 90 55
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16 The MRP Output Table
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18 Microprocessor Lead Time = 1
19 Week Number Overdue 1 2 3 4 5 6 7 8
20 Master Production Schedule 0 40 80 90 80 0 0 0
21 Scheduled Receipts 0 0 0 0 0 0 0 0
22 On Hand 60 60 20 0 0 0 0 0
23 Net Requirements 0 0 60 90 80 0 0 0
24 Planned Order Receipts 0 0 60 90 80 0 0 0
25 Planned Order Releases 0 0 60 90 80 0 0 0 0
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28 Monitor Lead Time = 2
29 Week Number Overdue 1 2 3 4 5 6 7 8
30 Gross Requirements 0 60 90 80 0 0 0 0
31 Scheduled Receipts 0 0 0 0 0 0 0 0
32 On Hand 10 50 50 0 0 0 0 0 0
33 Net Requirements 0 10 90 80 0 0 0 0
34 Planned Order Receipts 0 10 90 80 0 0 0 0
35 Planned Order Releases 10 90 80 0 0 0 0 0 0
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38 Keyboard Lead Time = 1
39 Week Number Overdue 1 2 3 4 5 6 7 8
40 Gross Requirements 0 60 90 80 0 0 0 0
41 Scheduled Receipts 0 0 0 0 0 0 0 0
42 On Hand 100 100 40 0 0 0 0 0
43 Net Requirements 0 0 50 80 0 0 0 0
44 Planned Order Receipts 0 0 50 80 0 0 0 0
45 Planned Order Releases 0 0 50 80 0 0 0 0 0
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 A B C D E F G H I J K
47 4
48 CPU Assembly Lead Time = 2
49 Week Number Overdue 1 2 3 4 5 6 7 8
50 Gross Requirements 0 60 90 80 0 0 0 0
51 Scheduled Receipts 0 0 0 0 0 0 0 0
52 On Hand 60 60 0 0 0 0 0 0
53 Net Requirements 0 0 90 80 0 0 0 0
54 Planned Order Receipts 0 0 90 80 0 0 0 0
55 Planned Order Releases 0 90 80 0 0 0 0 0 0
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58 Motherboard Lead Time = 1
59 Week Number Overdue 1 2 3 4 5 6 7 8
60 Gross Requirements 90 80 0 0 0 0 0 0
61 Scheduled Receipts 0 0 0 0 0 0 0 0
62 On Hand 100 10 0 0 0 0 0 0
63 Net Requirements 0 70 0 0 0 0 0 0
64 Planned Order Receipts 0 70 0 0 0 0 0 0
65 Planned Order Releases 0 70 0 0 0 0 0 0 0
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68 Disk drive Lead Time = 1
69 Week Number Overdue 1 2 3 4 5 6 7 8
70 Gross Requirements 90 80 0 0 0 0 0 0
71 Scheduled Receipts 0 0 0 0 0 0 0 0
72 On Hand 90 0 0 0 0 0 0 0
73 Net Requirements 0 80 0 0 0 0 0 0
74 Planned Order Receipts 0 80 0 0 0 0 0 0
75 Planned Order Releases 0 80 0 0 0 0 0 0 0
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78 CD-ROM drive Lead Time = 1
79 Week Number Overdue 1 2 3 4 5 6 7 8
80 Gross Requirements 90 80 0 0 0 0 0 0
81 Scheduled Receipts 0 0 0 0 0 0 0 0
82 On Hand 90 0 0 0 0 0 0 0
83 Net Requirements 0 80 0 0 0 0 0 0
84 Planned Order Receipts 0 80 0 0 0 0 0 0
85 Planned Order Releases 0 80 0 0 0 0 0 0 0
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 A B C D E F G H I J K L
1 Example 9.11 - A model for the part period balancing (PPB) method
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3 Input Ordering (or Setup) Cost = £50 User input cells
4 Unit holding cost = £0.70 are shaded purple
5 Economic part period (EPP) = 71
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7 <--------- Net requirements, REQP, for each period P ------------->
8 REQP 40 30 20 30 25 30 20 25
9 Period, P 1 2 3 4 5 6 7 8
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11 Weighted REQi 0 30 40 90 100 150 120 175
12 CUMi 0 30 70 160 260 410 530 705
13 (CUMi - EPP)/EPP -1.0 -0.6 0.0 1.3 2.7 4.8 6.5 8.9
14 0.0 1.0 0.6 0.0 1.3 2.7 4.8 6.5 8.9
15 Order Data = 40 30 20
16 0 Answer: Place an order for 90 units in period 1
17 New Factor, NFi 0 0 0 1 2 3 4 5
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19 Weighted REQi -40 -30 -20 0 25 60 60 100
20 CUMi 0 0 0 0 25 85 145 245
21 (CUMi - EPP)/EPP -1.0 -1.0 -1.0
-1.0 -0.6 0.2 1.0 2.5
22 0.2 1.0 1.0 1.01.0 0.6 0.2 1.0 2.5
23 Order Data = 30 25 30
24 3 Answer: Place an order for 85 units in period 4
25 New Factor, NFi 0 0 0 0 0 0 1 2
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27 Weighted REQi -40 -30 -20 -30 -25 -30 0 25
28 CUMi 0 0 0 0 0 0 0 25
29 (CUMi - EPP)/EPP -1.0 -1.0 -1.0 -1.0 -1.0 -1.0 -1.0 -0.6
30 0.6 1.0 1.0 1.0 1.0 1.0 1.0 1.0 0.6
31 Order Data = 20 25
32 6 Answer: Place an order for 45 units in period 7
33 New Factor, NFi 0 0 0 0 0 0 0 0
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36 Copy cell range B11:L17 repeatedly down the spreadsheet, placing the cursor in cells B19,
37 B27…. until the 'New Factor, NFi' row contains nothing but zeros (e.g. see row 33 above).
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 A B C D E F G H I J K L M
1 Exercise 9.12 - A simulation model for the GreenFingers Garden Centre
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3 Demand table Lead-time table
4 <-- Limits --> Dem- <-- Limits -->
5 Lower Upper and Pi Lower Upper weeks Pi
6 0 0.20 0 0.20 0 0.20 1 0.20 User input cells
7 0.20 0.35 1 0.15 0.20 0.80 2 0.60 are shaded purple
8 0.35 0.50 2 0.15 0.80 1.00 3 0.20
9 0.50 0.75 3 0.25 1.00
10 0.75 0.95 4 0.20
11 0.95 1.00 5 0.05 Reorder level = 5
12 1.00 Order quantity = 10
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14 Output table
15 Units Begin. RAND Dem- Ending New Lost Lead Recpt.
16 Week Recvd. Invntry. No. and Invntry. Level sales Order? time week
17 1 10 0.34 1 9 9 0 No
18 2 0 9 0.23 1 8 8 0 No
19 3 0 8 0.34 1 7 7 0 No
20 4 0 7 0.98 5 2 2 0 Yes 1 6
21 5 0 2 0.68 3 0 9 1 No
22 6 10 9 0.91 4 5 5 0 Yes 1 8
23 7 0 5 0.61 3 2 12 0 No
24 8 10 12 0.46 2 10 10 0 No
25 9 0 10 0.20 0 10 10 0 No
26 10 0 10 0.01 0 10 10 0 No
27 11 0 10 0.03 0 10 10 0 No
28 12 0 10 0.79 4 6 6 0 No
29 13 0 6 0.05 0 6 6 0 No
30 14 0 6 0.65 3 3 3 0 Yes 2 17
31 15 0 3 0.82 4 0 9 1 No
32 16 0 -1 0.58 3 0 6 4 No
33 17 10 6 0.69 3 3 3 0 Yes 2 20
34 18 0 3 0.98 5 0 8 2 No
35 19 0 -2 0.87 4 0 4 6 Yes 2 22
36 20 10 4 0.68 3 1 11 0 No
37 49 92 14 5
38 Service Level = 71.4%
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40 ANSWERS:
41 (i) Average weekly ending-inventory = 4.6 units/week
42 (ii) Lost sales over 20-week period = 14
43 (iii) Number of orders placed = 5
44 (iv) Service Level = 71.4%
 N O
1 Because of the
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