Assignment 1- 460- TME2 94
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Athabasca University, Athabasca *
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368
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Business
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May 14, 2024
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Nishtha Nishtha
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MGSC 368v11: Assignment 2
Final mark: 94
Due:
After completion of Lesson 10
Credit Weight:
20% of your final grade
Summary:
Multiple-choice questions (8 marks)
Problems/Discussion Questions (92 marks)
Part I: Multiple-Choice Questions
(8 marks: 2 marks each)
Indicate the correct answer for each of the multiple-choice questions below. 1.
A decoupling point is where inventory is carried and allows the “upstream” part of the supply chain to operate
a.
relatively dependent on the “downstream” part.
b.
relatively independent of the “downstream” part.
c.
relatively independent of operational needs.
d.
as none of the above.
2.
For a car manufacturer, the demand for transmissions is considered
a.
dependent demand.
b.
independent demand.
c.
an outsourcing requirement.
d.
inventory redundancy.
3.
Four jobs must be processed through two machines. Each job must be processed on machine #1 before it can be processed on machine #2. The table below gives the processing times for the jobs in hours. Using Johnson’s rule, in which order should the jobs be scheduled?
Job
Machine
Machine
MGSC 368v11: Assignment 2
1
© Athabasca University, June 2022
1
2
A
4
12
B
14
10
C
20
16
D
14
9
a.
A – C – B – D
b.
A – D – B – C
c.
D – B – C – A
d.
A – B – D – C
4.
Four jobs must be processed through a single work centre. The following table gives the processing times and due dates of the jobs. Using the Critical Ratio Rule, in which order should the jobs be scheduled?
Job
Processing
Time (in Days)
Due Date
A
5
9
B
10
7
C
4
11
D
6
6
a.
C – A – B – D
b.C – A – D – B
c.
D – B – C – A
d.
B – D – A – C
Part II: Problems/Discussion Questions
(92 marks total)
5.
The Outdoor Company estimates that they will require 14,000 boxes of hiking supplies over the next year. Administrative and other costs associated with placing an order are estimated to be $23 per order. The Outdoor Company uses a rate of 12% per year for calculating inventory holding costs.
(16 marks)
The Outdoor Company’s supplier encourages its customers to order in large quantities by
offering a price break on volume. Hence, the price per box depends on the order quantity as follows: Order Size
Price per Box
0 – 349
32
350 – 649
30
650+
28
MGSC 368v11: Assignment 2
2
© Athabasca University, June 2022
a.Determine the optimal order quantity for this item.
(10 marks)
Annual demand (D)= 14000
Ordering cost(S) = $23
Holding cost (I)=12%
Unit cost(C)= 0-349 = 32
350-649= 30
650+ = 28
Holding cost = I*C
0-349 = 12% * 32= 3.84
350-649= 12%*30 = 3.60
650+ = 12%*28= 3.36
EOQ= Sqrt(2*D*S/H)
=2*14000*23/3.84
=409.52 which is not feasible as it falls outside the range of 0-349
For 350-649 range
EOQ= Sqrt (2*14000*23/3.6)
=422.95 which is feasible as it falls in the range of 350-649
For above 650 range
EOQ = Sqrt (2*14000*23/3.36)
= 437.80 which is not feasible as it falls outside the range of 650+.
Therefore, the optimal order quantity is 423.
b.On average, how many orders will The Outdoor Company place per year?
(3 marks)
No of orders that company will place = Annual demand (d) / EOQ
= 14000/ 422.95 = 33 order per year
c.If the lead time is two weeks, what is the reorder point? (Assume constant demand through the year.)
(3 marks)
Reorder point = Annual demand (d) / no of working days * lead time
Lead time = weeks
No of working days for full one year = 52 weeks
= (14000/ 52) *2
= 538
MGSC 368v11: Assignment 2
3
© Athabasca University, June 2022
MGSC 368v11: Assignment 2
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© Athabasca University, June 2022
6.
The Furniture Company produces two products: Product A and Product B. Product A is made of two units of C and two units of D. Product B is made of one unit of E and one unit of F. Component F is made of two units of D and one unit of G. The gross requirements for Products A and B are given below:
(20 marks)
Week
4
5
6
7
8
Product A
100
80
60
60
Product B
50
40
80
a.Draw a product structure tree for Products A and B.
(6 marks)
b.Develop the MRP schedule for all items given the following information:
(2 marks each; 14 marks)
Item
Present on hand
Lead time
Lot-size rule
A
0
1 week
L4L
B
0
1 week
L4L
C
30
2 weeks
*FOQ of 40 units
D
100
1 week
L4L
E
100
1 week
L4L
F
30
2 weeks
*FOQ of 60 units
G
0
1 week
L4L
*Note: FOQ stands for fixed order quantity
. For example, FOQ = 50 indicates that
any order quantity must be 50 units or some integer multiple of 50 units. FOQ is usually necessary because the supplier is only willing to sell full boxes of items (and in this example, each box contains 50 units). In your tables, show on hand at the beginning of a given period before receiving the planned order receipt for the period. Also, assume that all receipts and releases
are at the beginning of each period.
MGSC 368v11: Assignment 2
5
© Athabasca University, June 2022
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