Technology and information management
kylecs14
formatexample.docxAlbert Chang TIM-125 MOT II: Homework 6
Quantitative Problems (Chapter 11 Safety Inventory):
1. Exercise 11.2
Define:
Reconsider the Best Buy store in Exercise 1. The store manager has decided to follow a periodic review policy to manage inventory of cell phones. She plans to order every three weeks. Given a desired CSL of 95 percent, how much safety inventory should the store carry? What should its OUL be?
Weekly demand for Motorola cell phones at a Best Buy store is normally distributed, with a mean of 300 and a standard deviation of 200. Motorola takes two weeks to supply a Best Buy order. Best Buy is targeting a CSL of 95 percent and monitors its inventory continuously. How much safety inventory of cell phones should Best Buy carry? What should its ROP be?
Plan:
Information provided:
All information needed is in the textbook. The lecture notes from class are also useful.
Execute:
Conclusion: Best Buy store orders the difference between 2235 and current inventory every three weeks.
Conclusion: Best Buy should carry safety inventory of 735 Motorola cellular phones.
Check:
The conclusions I’ve arrived to have all be derived from the class notes and text readings so there shouldn’t be any discrepancies.
Learn:
I learned about the different efficient safety inventory strategies that can yield higher product availability with lower inventory such as aggregated inventories to meet demand uncertainty and how many small stores can reduce the level of safety inventory without hurting product availability.
2. Exercise 11.3
Define:
Assume that the Best Buy store in Exercise 1 has a policy of ordering cell phones from Motorola in lots of 500. Weekly demand for Motorola cell phones at the store is normally distributed, with a mean of 300 and a standard deviation of 200. Motorola takes two weeks to supply an order. If the store manager is targeting a fill rate of 99 percent, what safety inventory should the store carry? What should its ROP be?
Weekly demand for Motorola cell phones at a Best Buy store is normally distributed, with a mean of 300 and a standard deviation of 200. Motorola takes two weeks to supply a Best Buy order. Best Buy is targeting a CSL of 95 percent and monitors its inventory continuously. How much safety inventory of cell phones should Best Buy carry? What should its ROP be?
Plan:
Information provided:
All information needed is in the textbook. The lecture notes from class are also useful.
Execute:
Check: The conclusions I’ve arrived to have all be derived from the class notes and text readings so there shouldn’t be any discrepancies.
Learn: I learned about the important of safety inventory and having that surplus for unforeseen scenarios and the reorder point. The level of safety inventory can be calculated to ensure this surplus is not too extreme. A replenishment strategy is crucial to minimize annual costs.
3. Exercise 11.4
Define: Weekly demand for HP printers at a Sam’s Club store is normally distributed, with a mean of 250 and a standard deviation of 150. The store manager continuously monitors inventory and currently orders 1,000 printers each time the inventory drop to 600 printers. HP currently takes two weeks to fill an order. How much safety inventory does the store carry? What CSL does Sam’s Club achieve as a result of this policy? What fill rate does the store achieve?
Plan:
Information provided:
All information needed is in the textbook. The lecture notes from class are also useful.
Execute:
Conclusion: Therefore the value of fill rate is 95.61%
Conclusion: Safety Inventory of 100 HP printers should be carried by Sam’s club store.
Conclusion: Desired Cycle service level (CSL) = 0.68132
Value of (ESC) = 43.86125
Check: The conclusions I’ve arrived to have all be derived from the class notes and text readings so there shouldn’t be any discrepancies.
Learn: I learned about the important of safety inventory and having that surplus for unforeseen scenarios and the reorder point. The level of safety inventory can be calculated to ensure this surplus is not too extreme. Fill rate and CSL are crucial.
4. Exercise 11.5
Define: Return to the Sam’s Club store in Exercise 4. Assume that the supply lead time from HP is normally distributed, with a mean of 2 weeks and a standard deviation of 1.5 weeks.
How much safety inventory should Sam’s Club carry if it wants to provide a CSL of 95 percent? How does the required safety inventory change as the standard deviation of lead time is reduced from 1.5 weeks to zero in intervals of 0.5 weeks?
Weekly demand for HP printers at a Sam’s Club store is normally distributed, with a mean of 250 and a standard deviation of 150. The store manager continuously monitors inventory and currently orders 1,000 printers each the inventory drops to 600 printers. HP currently takes two weeks to fill an order. How much safety inventory does the store carry? What CSL does Sam’s Club achieve as a result of this policy? What fill rate does the store achieve?
Plan:
Information provided:
All information needed is in the textbook. The lecture notes from class are also useful.
Execute:
Safety Inventory of 709 HP printers should be carried by Sam’s club store.
Conclusion: Safety inventory of 539 HP printers should be carried by Sam’s club store.
Safety inventory of 405 HP printers should be carried by Sam’s club store.
Safety inventory of 349 HP printers should be carried by Sam’s club store.
Check: The conclusions I’ve arrived to have all be derived from the class notes and text readings so there shouldn’t be any discrepancies.
Learn: I learned about the important of safety inventory and having that surplus for unforeseen scenarios and the reorder point. The level of safety inventory can be calculated to ensure this surplus is not too extreme. A replenishment strategy is crucial to minimize annual costs.
Case-Study:
Define: McMaster-Carr: Please read the slide presentation by Daniel Lifschitz on SCM at McMaster-Carr, available on the TIM125 website. (Additionally, this company is also discussed in the SCM text in several places.) Then answer the following questions:
· What is McMaster-Carr’s business model and supply chain strategy?
· How does SCM at McMaster-Carr differ from companies like Walmart or Office Depot?
· Explain how “aggregation” is important to the success of McM-C’s supply-chain business model.
Plan:
Information provided:
All information needed is in the textbook. The lecture notes from class are also useful.
Execute:
McMaster-Carr’s Business Model and Supply Chain Strategy focuses on becoming a pre-eminent publisher; while providing operation, repair and maintenance supplies towards utility and other electronical hardware, McMaster provides quality customer service with a friendly and easy to access branding and catalog. They carry large and various types of inventories. Their goals are to chase unpredictability and continue in process improvements.
Supply Chain Management Differences from Walmart or Office Depot are that companies are forced to focus on revenue growth.
In the aggregate the unpredictable becomes predictable.
Check: Conclusions were drawn from the McMaster-Carr’s handout so the conclusion should be accurate.
Learn: Lessons learned were how crucial it is for a project team to work efficiently, with the right people, and the right process. Commitment is key.
