Azusa Pacific University - BUSI 514

Week 6: Homework 3

1)The movement cost of the improved layout is 78,000.

After an extensive product analysis using group technology, Leon Bazil has identified a product he believes should be pulled out of his process facility and handled in a work cell. Leon has identified the following operations as necessary for the work cell. The customer expects delivery of 250 units per day, and the workday is 420 minutes.

1. What is the takt take?

 

 

2. How many employees should be cross-trained for the cell?

 

 

 

3. Which operations may warrant special consideration?

 

 

2. Cleaning operations may warrant special consideration because they require 3.1 minutes out of a total operation time of 8 minutes for each unit.

 

Kamal Fatehl, production manager of Kennesaw Manufacturing, finds his profit at $15,000 (as shown in the statement below)—inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Kamal would like to improve the profit line to $25,000 so he can obtain the bank’s approval for the loan.

 

		% OF SALES
Sales	$250,000	100%
Cost of supply chain purchases	175,000	70%
Other production costs	30,000	12%
Fixed costs	30,000	12%
Profit	15,000	6%

 

1. What percentage improvement is needed in a supply chain strategy for profit to improve to

$25,000? What is the cost of material with a $25,000 profit? Total cost = $175,000 + 30,000 + 30,000 = $235,000

 

2. What percentage improvement is needed in a sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000? (Hint: See Example 1.)

 

 

3. William Beville’s computer training school, in Richmond, stocks workbooks with the following characteristics:

 

Demand D = 19,500 units/year

Ordering cost S = $25/order Holding cost H = $4/unit/year

 

1. Calculate the EOQ for the workbooks.

 

 

2. What are the annual holding costs for the workbooks?

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3. What are the annual ordering costs?

 

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4.  Joe Henry’s machine shop uses 2,500 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:

 

Annual demand:	2,500
Holding cost per bracket per year:	$1.50
Order cost per order:	$18.75
Lead time:	2 days
Working days per year:	250

 

1. Given the above information, what would be the economic order quantity (EOQ)?

 

 

2. Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost?

 

 

 

 

 

3. Given the EOQ, how many orders would be made each year? What would be the annual order cost?

 

 

 

 

 

4. Given the EOQ, what is the total annual cost of managing the inventory?

 

 

5. What is the time between orders?

 

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6. What is the reorder point (ROP)?

 

 

 

 

5. How big should the sample be for a statistically accurate standard (at, say, the 99.73% confidence level and accuracy of ±5%)?

 

Observations	xi	xx	(xi - xx)	(xi - xx)2
1	2.05	1.90	0.15	0.0225
2	1.92	1.90	0.02	0.0004
3	2.01	1.90	0.11	0.0121
4	1.89	1.90	-0.01	0.0001
5	1.77	1.90	-0.13	0.0169
6	1.80	1.90	-0.1	0.01
7	1.86	1.90	-0.04	0.0016
8	1.83	1.90	-0.07	0.0049
9	1.93	1.90	0.03	0.0009
10	1.96	1.90	0.06	0.0036
11	1.95	1.90	0.05	0.0025
12	2.05	1.90	0.15	0.0225
13	1.79	1.90	-0.11	0.0121
14	1.82	1.90	-0.08	0.0064
15	1.85	1.90	-0.05	0.0025
16	1.85	1.90	-0.05	0.0025
17	1.99	1.90	0.09	0.0081
Σ(xi - xx)2	0.1296

 

s = √Σ(Each sample observation - xx)² / Number in sample - 1 s = √0.1296 / 17 - 1

s = √0.0081 = 0.09

 

n = (z x s / h x xx)²

n = (3 x 0.09 / 0.05 x 1.90)²

n = (0.27 / 0.095)² = 8.077 = 9 units

 

The number of observations required for a statistically accurate standard is 9 units.

 

1. Is the sample size adequate?

 

 

2. How many units should be produced at this workstation per day?

 

 

 

 

 

3. What is the cost per unit for this task in direct labor cost?

 

 

 

Chapter 11: Arnold Palmer Hospital's Supply Chain.

 

 

1. How does this supply chain differ from that in a manufacturing firm?

 

 

2. What are the constraints on making decisions based on economics alone at Arnold Palmer Hospital?