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CSE171B_270BMOTII_FINALEXAMINATION.pdf
CSE 171B/270B, MOT II: FINAL EXAMINATION
S. Desa, CSE 171B207B Final
Author: Zhaowei Gu Students Identification Number: 1523932
Institution: University of California Santa Cruz Instructor: S. Desa.
02/17/2020
1. Planning (5 points)
Define the Problem: Create a plan and time schedule for completing the final exam. Use an appropriate table (see Problem 7 below) to track how well you execute your schedule and make notes on any obstacles and problems you encounter.
Plan the treatment of the problem: 1. Create a project plan 2. Finished problem 6 below
Execute the plan:
Project Plan
Status
Thursday, 12 March 2020 Receive the Final Examination, read through it and ask questions if needed.
✅
Friday, 13 March 2020 Start on Question 1 & 7 ✅
Saturday, 14 March 2020 Start and finish on Question 2 & 3 ✅
Sunday, 15 March 2020 Start on Question 4 & 5 ✅
Monday, 16 March 2020 Finish on Question 4 & 5 Start on Question 6
✅
Tuesday, 17 March 2020 Due Date 5 PM Finish on Question 6 Finish Question 1 & 7 Double-check the works
✅
PROBLEM 2: SCM DESIGN/ANALYSIS FRAMEWORK (1.0 HOUR, 10 POINTS)
Define the Problem: You have been hired as a consultant by Poly (formerly Plantronics), a medium-sized company “headquartered” in Santa Cruz, which is the world leader in communication headsets. You have been asked to design their supply chain all the way from “high-level” concerns (e.g., competitive strategy, “alignment”), through analysis/procedures (e.g., inventory management models) to the actual integrated software that will be used to manage their Supply Chain. Before you start, Poly has asked you to do the following:
a) Describe the high-level framework (process) for performing supply chain management from strategy to planning to operations for a typical high-tech product.
b) Create appropriate diagrams to help them visualize the structure of your framework and associated procedures.
Plan the treatment of the problem: 1. Answer Q#1 2. Answer Q#2
Execute the plan: 1. Describe the high-level framework (process) for performing supply chain management from strategy to planning to operations for a typical high-tech product
1. Create a Competitive Strategy: Figure out the competitive strategy that would be the best fit based on other players’ strategies.
2. Create a Product Development Strategy: a. Figure out the product development strategy that would be the best fit the
company 3. Supply Chain Strategy:
a. Define the SC strategy, to be aligned with the competitive strategy b. Design the supply chain to properly meet objectives for managing
inventory, facilities, transportation, and easy communication of information.
c. Determine the position on the IDU (Implied demand uncertainty) spectrum d. Map the SC strategy onto a responsiveness spectrum e. Determine where the company is located in the zone of strategic fit and
figure out how the company can expand the scope of strategic fit across the entire supply chain
f. Determine the SC tradeoff between cost and responsiveness
4. Market Strategy (Demand Forecasting): a. Gather demand data from the market analysis and cash-flow analysis b. Perform demand forecasting using the static method to compute initial
estimates of the level, trend, and seasonality c. Develop a product life-cycle model to determine where the company
should lie in the zone of strategic fit d. Perform demand forecasting using Moving Average, Simple Exponential
Smoothing, Holt’s Model, and Winter’s Model. e. Plot the data f. Determine which forecasting method is the best forecasting method
5. Inventory Management (Cycle Inventory)
a. Determine the optimal lot size and the optimal shipping frequency b. Determine the lowest inventory size (safety inventory) that can be stocked
for cost efficiency c. Use aggregation to determine various costs. Use various kinds of
aggregation such as simple aggregation and tailored aggregation for best results.
6. Transportation
a. Determine which mode of transportation minimizes total cost by different modes of transportation
b. Understand the best placement of facilities to reduce transportation costs to customers
c. Explore tailed transportation by customer density and distance as well as by-product demand and value
2. Create appropriate diagrams to help them visualize the structure of your framework and associated procedures.
1. Create Porter’s fix (six) model to get a better view of the market. (associated with competitive strategy)
2. Determine the Plantronics competitive strategy.
3. Create an Efficiency/Responsiveness, IDU and strategic fit diagram, product life
cycle diagram
4. Creating a cycle inventory diagram to visualize when Plantronics should re-order
for new stock.
Check your work: Is the work correctly in every detail? Yes Are the assumptions/planning reasonable? Yes Does the result make sense? Yes I checked all the work I did, they’re all perfectly done.
Learn and Generalize: I learned how to properly go through the process of approaching a supply chain network.
PROBLEM 3: OPTIMAL LOT SIZE AND CYCLE INVENTORY FOR SPECIALTY PACKAGING COMPANY (SPC) (0.5 HOURS, 10 POINTS)
Define the Problem: If, in Problem 4 of the midterm, the holding cost h = 0.20 (rather than h = 0.15), what is optimal lot size and the required cycle inventory for polystyrene resin? Use these new numerical values in the problems below.
Plan the treatment of the problem: Go back to the midterm and recalculate the optimal lot size and required cycle inventory for black plastic for new holding cost h = 0.2
Execute the plan: Go back to the midterm and recalculate the optimal lot size and required cycle inventory for black plastic for new holding cost h = 0.2 D (Annual Demand) = 28770 S(Set up cost) = $300 d1 = 1000 pound units h (holding cost per year) = 20% C(unit cost) = $25 Optimal lot size:
858.06 units/shipments Q*L = √ hC2DS = √ 0.2×252×28770×300 = 1 Cycle inventory:
29.03 units2 Q*L = 2
1858.06 = 9
Check your work: Is the work correctly in every detail? Yes
Are the assumptions/planning reasonable? Yes Does the result make sense? Yes I checked all the work I did, they’re all perfectly done.
Learn and Generalize: I have a better understanding of how to calculate economic order quality, optimal lot size, and cycle inventory.
PROBLEM 4: SAFETY INVENTORY FOR POLYSTYRENE RESIN AT SPC (1 HOUR, 20 POINTS)
Define the Problem: Use the results from Problem 3 for all calculations. Answer the following questions about safety inventory for polystyrene resin at SPC:
a) Why should SPC have a safety inventory? What is the average weekly demand for black plastic (and therefore polystyrene resin) for 2007? If the coefficient of variation (cv) for black plastic is 0.25, what is the standard deviation in the weekly demand?
b) The polystyrene supplier has a lead-time of 2 weeks. SPC would like its Cycle Service Level (CSL) to be 0.95. Determine the necessary safety inventory (safety stock) level for polystyrene resin for a continuous replenishment policy. What is the Re-order Point (ROP)? What is the fill rate? What is the average inventory? What is the average flow time?
c) Create a diagram that shows all the relevant quantities from part (b). d) In general, is the demand during the lead-time greater than or less than the lot
size? Explain your answer with the help of the diagram from part (c).
Plan the treatment of the problem: 1. Answer Q#1 2. Answer Q#2 3. Answer Q#3 4. Answer Q#4
Execute the plan: 1. Why should SPC have a safety inventory? What is the average weekly demand for black plastic (and therefore polystyrene resin) for 2007? If the coefficient of variation (cv) for black plastic is 0.25, what is the standard deviation in the weekly demand? D (Annual Demand) = 28770 The reason why SPC should have safety inventory is that when consumer’s present demand that exceeds the forecasted demand it can help prevents the product shortage.
The average weekly demand for black plastic is, (52 weeks in a year)DW = 52 annual demand
53.269 units/weekDW = 52 28770 = 5
The standard deviation of weekly demand with a coefficient variance of 0.25
w 0.25 53.269 .25 38.317units/week= D * = 5 × 0 = 1 2. The polystyrene supplier has a lead-time of 2 weeks. SPC would like its Cycle Service Level (CSL) to be 0.95. Determine the necessary safety inventory (safety stock) level for polystyrene resin for a continuous replenishment policy. What is the Re-order Point (ROP)? What is the fill rate? What is the average inventory? What is the average flow time? Given Data: Average weekly demand, DW = 553.269 units Standard deviation of weekly demand, = 138.317 Lead time, L = 2 weeks CSL = 0.95 QL* = 1858.06 From the sheet of the statistical table, we know that 1.65s (0.95) F −1 = s .65 38.317 22.756s = 1 × 1 × √2 = 3
The formula for Re-order point, ROP is
OP sR = DL + s 53.269 106.54DL = DW × L = 5 × 2 = 1
OP 106.54 22.756 429.29R = 1 + 3 = 1 Standard deviation of demand during L periods = 38.317 95.61√2 × 1 = 1 Level of safety inventory,
SC − 22.756[1 s( )] 95.61 s( )E = 3 − F 195.61 322.756 + 1 × F 195.61
138.317
SC − 22.756[1 s(1.65)] 95.61 s(1.65) E = 3 − F + 1 × F SC − 22.756[1 .95] 95.61 .95E = 3 − 0 + 1 × 0 SC − 22.756[1 .95] 95.61 .95 69.692E = 3 − 0 + 1 × 0 = 1
Fill rate = 90.9%1858.06 69.692)/1858.06 9085 F r = ( − 1 = . = Average inventory = /2 = 929.03 units858.06 1 Average flow time = = / (2 * 553.269) = 1.68 days858.06 1 3. Create a diagram that shows all the relevant quantities from part (b).
4. In general, is the demand during the lead-time greater than or less than the lot size? Explain your answer with the help of the diagram from part (c). Based on the result I got, we can see the demand during the lead-time is less than the lot size which 553 < 1858. And the demand during the lead-time suppose to be less than the lot size because then that will avoid the backlog.
Check your work: Is the work correctly in every detail? Yes Are the assumptions/planning reasonable? Yes Does the result make sense? Yes I checked all the work I did, they’re all perfectly done.
Learn and Generalize: I learned how inventory cycling works and different equivalent terms. I have learned the data correlates to reorder point. I have better understand how to calculate economic order quality, optimal lot size, and total inventory costs.
PROBLEM 5: SOURCING FOR SPC (0.5-1.0 HOUR FOR READING; 0.5-1 HOUR TO SOLVE THE
PROBLEM; 25 POINTS)
Define the Problem: Read the first four sections on “Sourcing Decisions in a Supply Chain” from the textbook (Sections 14.1-14.4 Third Edition/Fourth Edition). Use the results from Problem 3 for all calculations. Julie Williams needs to make a choice between the following 2 suppliers of polystyrene resin:
● Supplier 1 : unit cost = $20 per unit (1 unit =1000lb.); average lead time= 1 week; standard deviation of lead time = 0.5 week; Batch or lot size =3000 units
● Supplier 2 : unit cost = $15 per unit (1 unit =1000lb.); average lead time= 2 weeks; standard deviation of lead time = 1 week; Batch or lot size = 5000 units
Answer the following questions:
a) Which supplier should Julie choose, based on minimizing total cost, if her inventory holding cost h = 0.20 and her desired target CSL = 95%?
b) Create a supplier scorecard that Julie can use to compare different suppliers. (Hint: Use the Utility Function approach developed in CSE 171A/270A for choosing between alternatives, as well as ideas from the text.)
Plan the treatment of the problem: 1. Answer Q#1 2. Answer Q#2
Execute the plan: Given Data: Average weekly demand, DW = 553.269 units Holding cost = 0.2 CSL = 0.95 Supplier 1: unit cost = $20 per unit (1 unit =1000lb.); average lead time= 1 week;
standard deviation of lead time = 0.5 week; Batch or lot size =3000 units Supplier 2: unit cost = $15 per unit (1 unit =1000lb.); average lead time= 2 weeks; standard deviation of lead time = 1 week; Batch or lot size = 5000 units Standard deviation of weekly demand, = 138.317 Equation:
● Annual material cost = demand * 52 * selling price ● Average cycle inventory = lot size / 2 ● Annual cost of holding cycle inventory = Average cycle inventory * sell price *
holding cost ● Standard deviation of demand during lead time = SQRT(avg lead time * St.d of
demand * avg cycle inventory * St.d of lead time) ● Safety inventory required with current supplier = Fs^-1(CSL)* standard deviation of
demand during lead time ● Annual cost of holding safety inventory = safety inventory required with current
supplier * sell price * holding cost 1. Supplier 1:
● Annual material cost = demand * 52 * selling price = 553.269 * 52 * 20 = $575400 ● Average cycle inventory = lot size / 2 = 3000/2 = 1500 ● Annual cost of holding cycle inventory = Average cycle inventory * sell price *
holding cost = 1500 * 20 * 0.2 = $6000 ● Standard deviation of demand during lead time = SQRT(avg lead time * St.d of
demand + avg cycle inventory * St.d of lead time) = √1 38.317 000 .5× 1 + 1 × 0 =25.26
● Safety inventory required with current supplier = Fs^-1(CSL)* standard deviation of demand during lead time = 1.65 * 25.26 = 41.69
● Annual cost of holding safety inventory = safety inventory required with current supplier * sell price * holding cost = 41.69 *20 *0.2 = $166.75
● Annual cost of using current supplier = 575400 + 6000 + 166.75 = $581567 Supplier 2:
● Annual material cost = demand * 52 * selling price = 553.269 * 52 * 15 = $431550 ● Average cycle inventory = lot size / 2 = 5000/2 = 2500 ● Annual cost of holding cycle inventory = Average cycle inventory * sell price *
holding cost = 2500 * 15 * 0.2 = $7500 ● Standard deviation of demand during lead time = SQRT(avg lead time * St.d of
demand + avg cycle inventory * St.d of lead time) = =52.69√2 38.317 500× 1 + 2 × 1
● Safety inventory required with current supplier = Fs^-1(CSL)* standard deviation of demand during lead time = 1.65 *52.69 = 86.945
● Annual cost of holding safety inventory = safety inventory required with current supplier * sell price * holding cost = 52.69 * 15 * 0.2 = $158.08
● Annual cost of using current supplier = 431550 + 7500 + 158.08 = $439208 Based on the calculation, we can see that taking supplier 2’s option is the most cost-efficient choice. 2. Create a supplier scorecard that Julie can use to compare different suppliers.
Data Supplier 1 Supplier 2
Weekly Demand 553.269 553.269
Holding Cost 0.2 0.2
CSL 0.95 0.95
Selling Price 20 15
Average Lead Time 1 2
Standard Deviation of Lead Time 0.5 1
Batch or lot size 3000 5000
Annual Material Cost 575400 431550
Average cycle Inventory 1500 2500
Annual cost of holding cycle inventory 6000 7500
Standard deviation of demand during lead time 25.26 52.69
Safety inventory required with current supplier 41.69 86.945
Annual cost of holding safety inventory 166.75 158.08
Annual cost of using current supplier 581567 439208
Check your work: Is the work correctly in every detail?
Yes Are the assumptions/planning reasonable? Yes Does the result make sense? Yes I checked all the work I did, they’re all perfectly done.
Learn and Generalize: Through this problem, I have a better understanding of how to dissect and provide a company’s supply chain strategy and its characteristics to better aid me in the practice of this method on my project.
PROBLEM 6: TRANSPORTATION DESIGN FOR SPC (1-1.5 HOURS; 25 POINTS)
Define the Problem: Read the section on “Trade-offs in Transportation design” from the textbook (Section 13.5 in Third Edition/Fourth Edition) Answer the following questions about transportation design for transporting polystyrene resin (PR) from the PR supplier to SPC:
a) Create the appropriate table in Excel for comparing rail versus truck delivery options for modes of transportation.
b) Use the table from (a) to select the optimal mode of transportation. Provide quantitative evidence to support your selection. (Make the appropriate assumptions about transportation and other costs).
Plan the treatment of the problem: 1. Finish Q#1 2. Finish Q#2
Execute the plan: 1. Create the appropriate table in Excel for comparing rail versus truck delivery options for modes of transportation. Rail: Replenishment lead time, L= 7 days + 5 days = 12 days Holding cost = $12 x 0.12 = 1.44 Cycle inventory = Q/2 = 2,000/2 = 1,000 units Safety Inventory = L/2 days of demand = (12/2)(37808.5/365) = 621.51 units In-Transit Inventory = 37808.5(5/365) = 517.925 units Total average inventory = 1,000 + 517.925 + 621.51 = 2139.435 units Annual Holding Cost = 2139.435x 1.44 = $3080.79 Annual transportation cost = 37808.5 x 6.5 = $245755.25 Total annual cost = $245755.25 + $3080.79= 248836.04
Truck: Replenishment lead time, L= 7 days + 3 days = 10 days Holding cost = $10 x 0.12 = 1.2 Cycle inventory = Q/2 = 2,000/2 = 1,000 units Safety Inventory = L/2 days of demand = (10/2)(37808.5/365) = 517.925units In-Transit Inventory = 31,292(3/365) = 310.75 units Total average inventory = 1,000 + 517.925+ 310.75 = 1828.675 units Annual Holding Cost = 1685.85753425 x 1.5 = $2743.01 Annual transportation cost = 37808.5 x 7.5 = $283563.75 Total annual cost = $2743.01 + $283563.75 = $286306.76
2. Use the table from (a) to select the optimal mode of transportation. Provide quantitative evidence to support your selection. (Make the appropriate assumptions about transportation and other costs). Based on the result I got, to minimizes the cost we should select Rail transportation because it has lower cost compared to Truck
Check your work: Is the work correctly in every detail? Yes Are the assumptions/planning reasonable? Yes Does the result make sense?
Yes I checked all the work I did, they’re all perfectly done.
Learn and Generalize: It was a good review of calculating all the cost factor comparisons to pick the most optimal transportation for the lost pricing.
PROBLEM 7: EXECUTION OF YOUR PLAN (0.5 HOURS, 5 POINTS)
Define the Problem: Use a table to compare your plan from Problem 1 (column 1) with its execution (column 2). Indicate the reasons for the difference between the plan and its execution (column 3). Add additional columns to capture recommendations for improved execution of your plans in the future. Write down three key lessons you learned in this course.
Plan the treatment of the problem:
Make a table
Column 1: Problem 1 plan Column 2: Problem 1 plan execution date Column 3: the reason why there is a difference Column 4: What I have learned
Execute the plan:
Problem 1 plan Execution date Reason for difference what I have learned
Receive the Final Examination, read through it and ask questions if needed.
Thursday, 12 March 2020
No difference, plan was well executed, and work was done accurately
No improvements needed because everything went as planned.
Start on Question 1 & 7
Friday, 13 March 2020
This problem is pretty straight forward, I have completed this on time
No improvements needed because everything went as planned.
Start and finish on Question 2 & 3
Saturday, 14 March 2020
A lot to be done, took me around 5 hr, then I took a break from it.
It was a really good practice and I have a better understanding after finish this problem sets.
Start on Question 4 & 5
Sunday, 15 March 2020
Took a long time for me to figure out the equations and numbers
I had some problem with the calculation part and was not be able to finish in one day because I was really busy
Finish on Question 4 & 5 Start on Question 6
Monday, 16 March 2020
No difference No improvements needed because everything went as planned.
Due Date 5 PM Finish on Question 6 Finish Question 1 & 7 Double-check the works
Tuesday, 17 March 2020
Took longer than what I thought
took some time and got some ideas how to do the Q#6 and finally finish it in 2 hours.
Check your work: Is the work correctly in every detail? Yes Are the assumptions/planning reasonable? Yes Does the result make sense? Yes
Learn and Generalize: It’s always important to keep tracking the work progress. This exam was a really good practice and I have a better understanding after finish this problem sets. I had some problems with the calculation part and was not be able to finish the problem in one day because I was really busy Really hard final weeks, hopefully I will get good grades on this. For this exam, from my experience, before I am able to handle the time very well, I know which part I need to spend more time on.
