Problem 1:
Ray's 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 cost $25 to place.
a) Using the EOQ model, how many should Ray order each time?
Problem 2:
Gentle Ben's Bar and Restaurant uses 5,000 quart bottles of an imported wine each year. The effervescent wine cost $3 per bottle and is served only in whole bottles because it loses its bubbles quickly.
Ben figures that it cost $10 each time an order is placed and holding costs are 20% of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 100 bottles (closed two weeks per year)
with a standard deviation of 30 bottles. Ben would like to use an inventory system that minimizes inventory cost and will provide 95% service probability. (Z≈1.65)
a) What is the economic quantity for Ben to order?
b) At what inventory level should he place an order?
Problem 3:
Retailers Warehouse (RW) is an independent supplier of household items to department stores. RW attempts to stock enough itmes for a 98% service probability.
A stainless steel knife set is one item it stocks. Demand (2,400 sets per year) is relatively stable over the entire year. Whenever new stock is ordered, a buyer must assure that numbers are correct for stock on hand
and then phone in a new order. The total cost involved to place an order is about $5. RW figures that holding inventory in stock and paying for interest on borrowed capital, insurance, and so on, add up to about $4
holding cost per unit per year.
Analysis of the past data shows that the standard deviation of demand from retailers is about four units per day for a 365-day year. Lead time to get the order is seven days.
a) What is the economic order quantity?
b) What is the reorder point?
Problem 4:
The following table gives the operation times and due dates for five jobs which are to be processed on a machine. Assign the jobs according to the shortest operation time and calculate the mean flow time.
Job Processing Time Due Date (Days Hence)
101 6 days 5
102 7 days 3
103 4 days 4
104 9 days 7
105 5 days 2
Problem 5:
The following table contains information regarding jobs that are to be scheduled through one machine:
Job Processing Time (Days) Due Date
A 4 20
B 12 30
C 2 15
D 11 16
E 10 18
F 3 5
G 6 9
a) What is the first-come, first-served (FCFS) schedule?
b) What is the shortest operating time (SOT) schedule?
c) What is the slack time remaining (STR) schedule?
d) What is the earliest due date (EDD) schedule?
e) What are the mean flow times for each of the schedules above?
Problem 6:
Jobs A, B, C, D, and E must go through Processes I and II in that sequence (Process I first, then Process II). Use Johnson's rule to determine the optimal sequence which to schedule the jobs to minimize the total required time.
Job Required Processing Time on I Required Processing Time on II
A 4 5
B 16 14
C 8 7
D 12 11
E 3 9
Extra Credit: Use Johnson's rule to determine the optimal sequence in which to schedule the jobs to minimize the total required time.