MANEGMENT

  1  

Homework  3  –  Total  100  points    

Instructions:    

• You   can   scan   or   take   a   picture   of   your   diagram   and   attach   to   your   submission.  

• Please  type  your  answers   in  Word/Excel  or  text  option  of  the  Blackboard.   (You  can  attach  your  files  when  you  submit  your  homework.)  

    Questions:    

1. (50  points)—MRP     Assume  that  Product  Z  is  made  of  2  units  of  A  and  4  units  of  B.  A  is  made  of  3   units  of  C  and  4  D.  D  is  made  of  2  units  of  E.     Lead  times  for  purchase  or  fabrication  of  each  unit  to  final  assembly  are  Z   takes  2  weeks;  A,  B,  C,  and  D  take  1  week  each;  and  E  takes  3  weeks.     50   units   are   required   in   Period   10.   (Assume   that   there   is   currently   no   inventory  on  hand  of  any  these  items.)     (a) Show  the  bill  of  materials  (product  structure  tree).   (b) Develop  an  MRP  planning  schedule  showing  gross  and  net  requirements  

and  order  release  and  order  receipt  dates.        

2. (50  points)—Inventory  Management  (Reorder  Point  Calculation)    

A  distributor  of  large  appliances  needs  to  determine  the  order  quantities  and   reorder  points  for  the  various  products  it  carries.  The  following  data  refer  to  a   specific  refrigerator  in  its  product  line:  

  Cost  to  place  an  order   $100   Holding  cost   20  percent  of  product  cost  per  year   Cost  of  refrigerator   $500  each   Annual  demand   500  refrigerators   Standard  deviation  during  lead  time   10  refrigerators   Lead  time   7  days  

  Consider  an  even  daily  demand  and  a  365-­‐day  year.  

   

  2  

a)  What  is  the  economic  order  quantity?    

b)  If  the  distributor  wants  a  97  percent  service  probability,  what  reorder   point,  R,  should  be  used?  (z=1.90  for  97%.)