Review Questions Session 8

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    ReviewQuestionsSession8

    ChaseJacobsChapter17Problem10(incoursepackage)

    ChaseJacobsChapter17Problem15(incoursepackage)

    Motorola

    Motorolamaintainsaninventoryofcircuitboardsnecessaryfortheassemblyofcellulartelephones.

    Motorolasuseoftheseboardsisfairlyconstantthroughouttheyear,averaging208,000boardsper

    year. Theunitpurchasecostif$0.78perboard;theinventoryholdingcostis20%oftheunit

    purchasecostperyear;andMotorolaestimatesthatitcosts$54toplaceeachordertoreplenishits

    inventory. Wheneveranorderisplaced,Motorolassuppliertakesanywherefrom1to2weeksto

    deliverthecircuit,sothatthedemandduringthedeliveryleadtimeisdistributednormallywith

    mean6000andstandarddeviation500. WhatisMotorolasoptimal(Q,ROP)policyifmanagement

    wantstosettheROPsuchthatthereisnomorethana3%chanceofastockoutduringeach

    replenishmentleadtime?

    Timbuk2Inc.

    Timbuk2Inc.

    manufactures

    over

    100,000

    different

    versions

    of

    amessenger

    bags.

    Suppose

    Timbuk2

    implementsacontinuousreviewmodeltomanageitsinventoryofaparticularplasticbuckle.

    Demandisapproximatelynormallydistributedwithameanof1000unitsperweekandastandard

    deviationof300. (Eachweeksdemandisindependentoftheotherweeks.)Sincethebuckleis

    sourcedabroad,itisfairlyexpensivetoordertheitem($25perorder),andittakesfourweeksto

    receivetheshipment. Theannualholdingcostsforthebuckleare$0.10.

    HowmanyshouldTimbuk2orderandwhen(atwhichinventorylevel)shoulditorder,ifitstarget

    servicelevelis99.5%? Whatwouldbetheservicelevelprovided,ifTimbuk2woulduseaROPof

    4000unitsinstead?YoumayassumethatTimbuk2isoperating50weeksperyear.