1. A 4-Stage Manufacturing Process has been shown in Slide #15. The cycle time for a lot of 1000 parts is 1250 hours.

1a. What would be the minimum cycle time that could be achieved if the production was split into 2 lots of 500 parts each?

1b. What would be the inventory level as a function of time (Assume the 500 parts can be sold to the customer as soon as the manufacturing is completed.)?

1c. What would be the minimum cycle time and inventory levels if the production is broken down into 4 lots of 250 parts each?

2. Quarter-inch stainless steel bolts, one-and-one half inches long, are consumed in a factory at a fairly steady rate of 60 per week. The bolts cost the plant 2 cents each. It costs the plant $12 to initiate an order, and holding costs are based on an annual interest rate of 25 percent.

2a. Determine the optimal number of bolts for the plant to purchase and the time between the placement of orders.

2b. What is the yearly setup and holding cost for this item?

2c. Suppose instead of small bolts we were talking about a bulky item such as packaging materials. What problem might there be with your analysis? 3. Reconsider the bolt example in

Q2; suppose the demand is 120 per week instead of 60 per week as estimated in Q2.

3a. What would be the setup plus holding cost be is we used the same lot size as calculated in Q2?

3b. What would be the cost if re-calculated the optimal lotsize for a demand of 120/week

3c.What is the percentage increase in cost for 100% increase in demand 3d. what does this tell you about the sensitivity of the EOQ model