Operation Management Exam 3
3.3
O&QM - MGMT 311 3.3 Exam 3
POM -MGMT 311 3.3 Exam 3 Your initials:
Operations and Quality Management - MGMT 311
Colorado State University – Pueblo, Hasan School of Business
Exam 3
Prof. P. Billington
DIRECTIONS: Answer all questions; show all work for credit on sheets of paper you provide. You do not need to return this exam sheet except for graphs drawn or tables filled in. This is a 175 point exam with the points shown in parentheses.
1. (20 points) Ace Manufacturing uses MRP to assist production planning of their two products, Widgets and Fidgets. A Widget requires one A and one B. A Fidget requires one C and one D. Part A requires one E and one F. Part B requires one E and one H. Part C requires one E and one G. Part D requires one B and one E. Draw the product structure tree for these two products with the proper low level coding.
2. You are the owner of Pueblo Powerful Pizza. One of your functions is to minimize your cost for the cardboard pizza boxes, for which you have the following information: each box costs $0.25, holding cost is 100% of the price, ordering cost is $10/order, and you estimate a constant demand of 20,000 boxes/year. You would minimize total cost by purchasing the EOQ quantity each time you place an order, assuming no quantity discounts are available.
a. (7 points) What is the EOQ quantity?
b. (5 points) What is the total cost per year if you used the EOQ quantity from part a?
c. (5 points) How many orders per year, on average, will be placed?
d. (5 points) If the lead time is 5 days (with 365 days per year), what is the reorder point?
e. (5 points) How many days will there be between orders (with 365 days per year)?
f. (7 points) You decide that the time between orders is too long, and you would prefer to order just enough to last 1 week (7 days, and there are 52 weeks and 365 days per year), and you will place an order every week. How much will you order each week to cover just one week’s demand?
g. (6 points) Continuing part f, calculate the total cost of the weekly plan and determine the additional cost compared to the EOQ cost from part b?
h. (15 points) You decide that the additional cost from part g is not acceptable, so you consider quantity discounts, for which you have found a supplier. She will sell you the boxes at the following quantity discount pricing: 1 to 9999 boxes at $0.25 per box; 10,000 to 19,999 boxes at $0.19 per box; and 20,000 and over at $0.16 per box. What quantity will result in the least total cost? Use the same data from earlier in this problem.
3. (50 points) Correctly fill in the materials plans for all the items. All lot sizing is lot-for-lot.
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Item |
Lead time |
Inventory on hand |
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X Y |
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X |
1 |
25 |
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A B C |
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Y |
1 |
45 |
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(1) (1) (2) |
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A |
2 |
25 |
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B |
2 |
320 |
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B |
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C |
3 |
120 |
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(2) |
Master Schedule
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Period |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
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X |
10 |
10 |
20 |
10 |
10 |
20 |
20 |
10 |
15 |
15 |
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Y |
15 |
25 |
20 |
20 |
30 |
20 |
20 |
15 |
25 |
15 |
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MRP Worksheets
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Item: X |
Lead |
time= |
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Lot |
sizing |
rule = |
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Gross Requirements |
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Scheduled Receipts |
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Projected on Hand |
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Net Requirements |
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Planned Order Receipts |
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Planned Order Releases |
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Item: Y |
Lead |
time= |
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Lot |
sizing |
rule = |
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Gross Requirements |
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Scheduled Receipts |
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Projected on Hand |
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Net Requirements |
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Planned Order Receipts |
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Planned Order Releases |
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Item: A |
Lead |
time= |
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Lot |
sizing |
rule = |
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Gross Requirements |
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Scheduled Receipts |
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Projected on Hand |
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Net Requirements |
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Planned Order Releases |
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Item: B |
Lead |
time= |
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Lot |
Sizing |
rule = |
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Gross Requirements |
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Scheduled Receipts |
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Projected on Hand |
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Net Requirements |
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Planned Order Releases |
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Period |
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Item: C |
Lead |
time= |
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Lot |
Sizing |
rule = |
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Gross Requirements |
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Scheduled Receipts |
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Projected on Hand |
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Net Requirements |
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Planned Order Releases |
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4. (30 points) Study the Mutual Insurance Company of Iowa case on page 645 of the text Operations Management, 11th edition (or page 662 of the 9th edition or page 649 of the 8th edition of the text).
Answer questions 1 and 4 at the end of the case. 15 points each.
5. (20 points) In your own life you probably do some things in a just-in-time basis. Describe at least one JIT example from your real life. Why is it a JIT example? What JIT elements are present in your real life experience? Discuss the concept of quality in the implementation of your JIT example. What are the risks involved in this JIT example? What are the advantages and disadvantages of the approach? Discuss in more detail using the JIT concepts from the chapter in the text.
If you cannot think of an example, think of something you do now that could be improved through the use of a JIT system. Describe it. How would you implement the change to JIT? What are the implications? Advantages and disadvantages? Discuss in more detail using the JIT concepts from the chapter in the text.
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