MSC301 Assignment 2 FALL2020

A)

Amount for the item k34= 10 x 200 = 2000

Percentage of money for the item= 2000/94130= 2.12

Amount for the itemk35 = 25 x 600 = 15000

Percentage of money for the item=15000/94130=15.93

Amount for the itemk36 = 36 x 150 = 5400

Percentage of money for the item=5400/94130=5.73

Amount for the itemM10 = 16 x 25 = 400

Percentage of money for the item=400 /94130=0.42

Amount for the itemM20 = 20 x 80 =1600

Percentage of money for the item =1600 / 94130= 1.69

Amount for the itemZ45 = 80 x 200 = 16000

Percentage of money for the item== 16000/94130= 16.99

Amount for the itemF14 = 20 x 300= 6000

Percentage of money for the item= 6000/94130=6.37

Amount for the itemF95 = 30 x 800 = 24000

Percentage of money for the item = 24000/ 94130= 25.49

Amount for the itemF99 = 20 x 60 = 1200

Percentage of money for the item= 1200/94130=1.27

Amount for the itemD45 = 10 x 550= 5500

Percentage of money for the item=5500/94130=5.84

Amount for the itemD48 = 12 x 90 = 1080

Percentage of money for the item=1080/94130=1.14

Amount for the itemD52 = 15 x 110 = 1650

Percentage of money for the item=1650/94130=1.75

Amount for the itemD57 = 40 x 120 = 4800

Percentage of money for the item=4800/94130=5.09

Amount for the itemN08 = 30 x 40= 1200

Percentage of money for the item=1200/94130=1.27

Amount for the itemP05 = 16 x 500= 8000

Percentage of money for the item= 8000/94130=8.49

Amount for the itemP09 = 10 x 30 = 300

Percentage of money for the item= 300/94130=0.318

TOLAT = 94130$

Item % of ammount Cumulative % Class

F95 25.49 25.49

Z45 16.99 42.48 A
K35 15.93 58.41
P05 8.49 66.9
F14 6.37 73.27
D45 5.84 79.11
K36 5.73 84.84
D57 5.09 89.93
K34 2.12 92.05
D52 1.75 93.8 B
M20 1.69 95.49
N08 1.27 96.76
F99 1.27 98.03
D48 1.14 99.17 C
M10 0.42 99.59
P09 0.31 99.9

B)

Managers can use this information to allocate the control effort.

c)

4.

Annual demand , D = 40 x 260 = 10400

Ordering cost , S= 60$

Annual carring cost , H= 30$

A)

2 DS
Qo = √ H

2 ×10400 ×60
=√ 30
1248000
=√ 30
=√ 41600

= 203.96 =204

204 boxes would minimize the sum of annual ordering and carrying costs

B)

Total annual cost =Annual carring cost + Annual ordering cost

Q D
= H + S
2 Q
= (204/2) x (30) + (10400/204) x (60)

= 6118.82 $
C)

Yes Annual ordering and Annual carrying costs are always equal at the EOQ. But when it is
rounding it is not equal at EOQ.

D)

The office manager is currently using an order size of 200 boxes.

That means Q= 200

Total annual cost =Annual caring cost + Annual ordering cost

Q D
= H + S
2 Q
=(200/2) x 30 + (10400/200) x 60

= 6120$

Now, 6120-6118.82 =1.18$

I will not recommend this as it is 1.85$ which is lower price point.

6.

A distributer uses 800 packing crates a month

Now , 800 x 12 = 9600 crates per year

Annual demand , D = 9600 crates

Ordering cost , S= 28$

Annual carrying cost , H = 35% =0.35 = (0.35 x 10)$ =3.5$ per crate/yr

Q D
TC = H + S
2 Q
=(800/2) x (3.50)+(9600/800)x(28) =1736$

2 DS
Qo = √ = √ ( 2 ) ×(9600)×(28)÷(3.50) = 391.91 = 392 (round)
H

Now Q = 392
Q D
TC = 2
H +
Q
S
 =(392/2) x (3.50)+(9600/392)x(28)

= 1371.71

Savings : (1736-1371.71) = 364.29$/yr

23.
d = 85boards per day

σ ¿ = 1.10 day

´¿=lead time= 6 days

ROP=625 boards
ROP = d x ´¿ + z d σ ¿
625 = 85 x 6 +z(85)x1.10
115
Z = 93.5
= 1.23 = 0.1093

24.
σ ¿ = 1day

´¿=4days

d́ =12 units per day

σ d = 2 units per day

SL= at least96% , z= 1.75$

´ + Z√ ´¿ σ d 2+ d2 σ 2¿
ROP= dLT
= 12 x (4) + (1.75) √ 4 × 4 +144 ×1
=48+ 1.75x(12.65)
=48 + 22.14
= 70.13
 = 71 units

26.
D= 5 boxes/week = 5 x 52week = 260 boxes/yr
S=2$
H=20$/box
2 DS
Qo = √ H

2 ×260 × 2
=
√ 20
=72.11 units

b)
d́ =5 BOXES/WEEK

σ d =0.5 BOXES/WEEK

LT=2 weeks
ROP = 12
ROP= d́ x LT + z σ d √¿
12 = 5 x 2 + z x 0.5 x √ 2
12 =10 + 0.707z
12-10=0.707z
2
Z= 0.707 =2.83

Lead time service is 0.9977 (appendix B)

Risk stock out : 1-0.9977 = 0.0023 =0.23%
27.
a) σ d=¿¿ 10 pounds
σ ¿=¿¿ 1DAY

d= 80 pounds
LT= 8 days
SL = 1-0.10 =0.9 , z=1.28

´ + Z√ ´¿ σ d 2+ d2 σ 2¿
ROP= dLT

=80 x 8 +1.28 x √ (8 × 102 ¿+ 802 × 1) ¿

=748.6
B)

29.
LT = 80 CASES
σ ¿=¿¿ 5 CASES

Appendix B , z (0.99)=2.33
Safety Stock = z x σ dLt
= 2.33 x 5
=11.65 =12

B)
Stock out risk = 100% - 99% =1%
30)
D= 250GALLON
H= 1$/MONTH
S=20$/order
σ d=¿14 gallon

Safety Stock = Z√ ´¿ σ d 2+ d2 σ 2¿
= 2.05 x √ 0.5 ×14 2+250 2 × 0
=20.3
B)
The expected number of units short per order cycle = 100% -98% = 2%