operation management

Student Name:

California State University San Marcos College of Business Administration

OM 305: Operations Management Instructor: Dr. Robert Aboolian

Fall 2020

Examination # 2 Time: 100 minutes December 10, 2020 Maximum: 200 points _ _

1 Please remember to identify yourself on the top of this page.

2 You may use a ”crib sheet” Excel and a calculator.

3 You are strictly prohibited to communicate with others or to use search engines during the exam.

4 Read the problems carefully, time yourself, and show your work to get

credit. Do your work in this set, and mark clearly where your final answer is to be found.

5 There are four problems on six pages.

6 Please Submit all your answer files (word or PDF) in the submission

folder provided in Cougar Courses. Good Luck! _ _

Page 2 Problem 1 (a to b: 50 points) A company will begin stocking remote control devices. Expected annual

demand is 16000 units. Ordering cost is $20 and annual holding cost is $4 per

unit. Lead time is 2 days and there are 250 working days per year.

a) (34 points) What is the penalty the company pays if the current ordering policy

is to order 800 units?

b) (16 points) If the optimal ordering policy is chosen what would be the average

inventory, cycle time, reorder point, and the average number of orders per year?

Page 3 Problem 2 (50 points) In August 2020, a car dealer will be trying to determine how many 2021 models

should be ordered. Each car ordered in August 2020 costs the dealer $10,000.

The demand for the dealer’s 2021 models has the following probability

distribution:

Each car is sold for $25,000. If the demand for 2021 cars exceeded the number of

cars ordered in August, the dealer must reorder at a cost of $15,000 per car. If

the demand for 2021 cars falls short, the dealer may dispose of excess cars in an

end-of-model-year sale for $7000 per car. How many 2021 cars should the

dealer order in August?

number of cars demanded probability

50 0.2 70 0.15 90 0.15 100 0.2 120 0.3

Page 4 Problem 3 (50 points):

A company will begin stocking remote control devices. Expected annual

demand is 8000 units. Ordering cost is $30 and annual holding cost is $3 per

unit per year. The devices can be purchased from either supplier A or supplier

B. Their price lists are as follows:

Which supplier and order size the company should use?

Quantity Unit Price Quantity Unit Price

0-199 14.00$ 0-149 14.10$

200-599 13.80$ 150-349 13.80$

600+ 13.60$ 350+ 13.70$

Supplier A Supplier B

Page 5

Problem 4 (50 points)

Seventy units of end item E are needed at the beginning of week 6. Two

cases (30 units per case) of J have been ordered and one case is scheduled to

arrive in week 3, and one in week 4. Note: J must be ordered by the case, and

B must be produced in multiples of 120 units. There are 60 units of B and

100 units of J now on hand. Lead times are two weeks each for E and B. Lead

time for J is one week if the order size is less than 300, otherwise the lead

time for J is three weeks. Prepare a material requirement plan for

component J.

E

B(2) J(6)

J(2) K

Page 6

Part = LT= Beg. Inv. 1 2 3 4 5 6 7

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

Part = LT= Beg. Inv. 1 2 3 4 5 6 7

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

Part = LT= Beg. Inv. 1 2 3 4 5 6 7

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases