Chapter 4: Supply and Demand Planning and Control
10OQ
DAT, Inc. needs to develop an aggregate plan for its product line. Relevant data are

The forecast for next year is

Management prefers to keep a constant workforce and production level, absorbing variations in demand through inventory excesses and shortages. Demand not met is carried over to the following month. Develop an aggregate plan that will meet the demand and other conditions of the problem. Do not try to find the optimum; just find a good solution and state the procedure you might use to test for a better solution. Make any necessary assumptions.
10OQ
Question: What supply chain metric measures how many complete orders were filled and shipped on time?
12OQ
Ray鈥檚 Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1,000 units. His cost to carry one unit is \(100 per year per unit, and he has estimated that each order costs \)25 to place. Using the EOQ model, how many should Ray order each time?
13OQ
Dunstreet鈥檚 Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. The demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. The standard deviation of demand for the sheets is five per day. There are currently 150 sheets on hand. How many sheets should you order?
14OQ
Charlie鈥檚 Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive. Charlie鈥檚 Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 30 pounds. Charlie鈥檚 prides itself on offering only the best quality ingredients and a high level of service, so it wants to ensure a 98 percent probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 500 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order?
15OQ
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.
| Item cost | \(10.00 | The standard deviation of weekly demand | 25 per week |
| Order cost | \)250.00 | Lead time | 1 week |
| Annual holding cost (%) | \(33% of the item cost | Service probability | 95% |
| Annual demand | 25,750 | ||
| Average demand | 515 per week | ||
a. State the order quantity and reorder point.
b. Determine the annual holding and order costs.
c. If a price break of \)50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually?
16OQ
Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolines chips. The trip will take Data about two days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of five per day (seven days per week) with a standard deviation of demand of one per day. He needs a 98 percent service probability. If he currently has 35 chips in inventory, how many should he order? What are the most he will ever have to order?
19OQ
The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to place an order is \(31.20, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is \)0.10 per unit. Find the reorder point necessary to provide a 98 percent service probability.
1AE
Initially, assume that Phil wants to minimize his inventory requirements. Assume that each order will be only for what is required for a single period. Using the following forms, calculate the net requirements and planned order releases for the gear boxes and input shafts. Assume that lot sizing is done using lot-for-lot (L4L)

1AE
Prepare an aggregate plan for the coming year, assuming that the sales forecast is perfect. Use the spreadsheet 鈥淏radford Manufacturing.鈥 In the spreadsheet, an area has been designated for your aggregate plan solution. Supply the number of packaging lines to run and the number of overtime hours for each quarter. You will need to set up the cost calculations in the spreadsheet. You may want to try using the Excel Solver to find a solution. Remember that your final solution needs an integer number of lines and an integer number of overtime hours for each quarter. (Solutions that require 8.9134 lines and 1.256 hours of overtime are not feasible.)