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MGSC
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303 Exam 2 SUM II 2013
| NOTE: Show all steps. Solve problems using EXCEL. |
| Date: 7-19-2013 Time: 5pm to 9pm. |
| 1. ABC Co. purchases an item. The annual demand for this item is 75000 units. The |
| ordering cost is $60 per order. The holding cost is $4 per unit per year. The lead time |
| for this item is 3 days. Assume 250 working days per year.
| Find: |
| a) Economic order quantity, EOQ. |
| b) What is the optimal number of orders per year. |
| c) What is the annual cost of ordering and holding inventory. |
| d) What is the re-order point. |
| 2. ABC Co. manufactures a subcomponent at the rate of 400 per day when required. |
| Its annual demand for this item is 50000 units. Assume 250 working days per year. |
| Holding cost is $10 per unit per year. Set-up cost is $150 per set-up. Find: |
| a) Economic production quantity. |
| b)How many production runs will be made per year. |
| c)What will be the maximum inventory level. |
| d) What percentage of time during the year will this item be produced. |
| e) What is the annual cost for ordering and holding inventory. |
| 3. Hotel ABC has contracted out its towel laundering work. The lead time for the contractor |
| is 2 days. The daily demand for clean towels at the hotel is normally distributed with a mean of |
| 800 and a standard deviation of 150. Management has set the service level 95%. |
| For this service level, Z = 1.64 |
Find:
| a) The Reorder point. |
| b) Safety stock. |
| 4. A printing company has a contract with a legal firm to copy their court documents. Daily demand |
| is a constant at 10000 pages to be copied. The mean lead time for the contractor is 4 days with |
| a standard deviation of 1.25 days for delivering copies. Find the re-order point |
| for the law firm. The desired service level is 95%. The corresponding Z =1.64. |
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