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Brac Business School Course Name: Operations Management Course Code: MSC301 Section: 03

The document provides a summary of an Operations Management course submitted by student Kh Maisha Monjur to their professor Md. Hasan Maksud Chowdhury. It includes answers to multiple questions related to inventory management, economic order quantity, reorder point, safety stock, and risk of stockouts. Tables with item-level data and calculations involving demand, costs, lead times, and service levels are presented.

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Maisha Monjur
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39 views

Brac Business School Course Name: Operations Management Course Code: MSC301 Section: 03

The document provides a summary of an Operations Management course submitted by student Kh Maisha Monjur to their professor Md. Hasan Maksud Chowdhury. It includes answers to multiple questions related to inventory management, economic order quantity, reorder point, safety stock, and risk of stockouts. Tables with item-level data and calculations involving demand, costs, lead times, and service levels are presented.

Uploaded by

Maisha Monjur
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BRAC BUSINESS SCHOOL

Course name: Operations Management

Course code: MSC301

Section: 03

Submitted To:

Md. Hasan Maksud Chowdhury

Assistant Professor

BRAC University

Submitted by

Kh Maisha Monjur

ID: 17304133

DATE OF SUBMISSION: 06/12/2020


Answer to the question no 2

a)

Item Unit Cost Usage Amount Cost% Cumulati Classifica


ve tion

F95 30 800 24000 25.5 25.5 A


Z45 80 200 16000 17 42.5 A
K35 25 600 15000 15.9 58.4 A
P05 16 500 8000 8.5 66.9 A
F14 20 300 6000 6.4 73.3 A
D45 10 550 5500 5.8 79.1 A
K36 36 150 5400 5.7 84.9 B
D57 40 120 4800 5.1 90 B
K34 10 200 2000 2.1 92.1 B
D52 15 110 1650 1.8 93.9 C
M20 20 80 1600 1.7 95.6 C
F99 20 60 1200 1.3 96.8 C
N08 30 40 1200 1.3 98.1 C
D48 12 90 1080 1.1 99.3 C
M10 16 25 400 0.4 99.7 C
P09 10 30 300 0.3 100 C
94130

b) The demand for each category can be figured out by the managers. When demands increase
the stocks also increase. The category A brings more profit, that is why the managers will
negotiate with their suppliers more. They know their customers wanted which category the
most than other.

c) Depending on the large demand the manager may think of putting p05 on A category.
Answer to the Question No: 4

(a) D= 40 x 260
10400 boxes

S= $60
H=$30

Qo =√2𝐷𝑆/𝐻
= (√2*10400*60) / 30
=203.96 boxes

(b) Total Cost = Carrying cost + Ordering Cost

Total Cost = (Q/2)*H + (D/Q)*S


= (204/2)*30 + (10400/204)*60
= $6,118.82

Yes, annual ordering and carrying costs always equal at the EOQ.

(c) Q=200
Total Cost (200): (Q/2)*H + (D/Q)*S
= (200/2)*30 + (10400/200)*60
=$6,120

$6120-$6118.82 = $1.18 higher every year for Q=200


This is an acceptable rate

Answer to question no 6
D = 12 * 800 = 9600
H = 0.35 (35 /100) * 10 = $3.5 crate per year
S = 28$

Total Cost = (Q/2) * H + (D/Q) *S = 1736

Qo=

= 391.96

Total Cost = (Q/2) *H + (D/Q) *S


=1371.714264

Savings per year using Economic Order Quantity 364.29

Answer to the question no 21

a) ROP  21(2/7) 1.28(3.5) (2/7)

=9

Days of Supply = 9 / (21/7)

=9/3

=3

The ROP has 3 days of supply on hand

c) ROP = 9 gallons.

After one day,

9 – 2 = 7 gallons
7= 21(2/7) + z(3.5)( )√2/7 )

7= 6 +1.871z

z= 0.53

From table =.7019.

Risk of stock out before this order arrives = 1 - .7019

= .2981

= 29.81%.

Answer to the question no 23

d = 85 boards/day

ROP= 625 boards

LT= 6 days

ϬLT= 1.1 days

Determine the probability of a stock out:

ROP= d x LT = zd Ϭlt

625 = (85*6) + z (85)*(1.1)

625=510+93.5z

115=93.5

Z=115/93.5

Z=1.23

Using appendix B, table B, we find a probability of .8907


The risk of stock out = 1- .8907= .1093 = 10.93%

Answer to the question no 24

Given that:

Service level: 96%

¯d: 12 units per day

αd: 2units per day

¯LT: 4 Days α LT: 1

day

a. Determine the ROP:

Appendix B, Table B, looking for the z value corresponding to .96

Closest probability is .9599, which corresponds to z= 1.75

ROP: ¯d x ¯LT + z √ LTα2d + d2α LT2

: 70.14 = 71 units

b. If the seasonality is presented during the busy time the model may not be appropriate, it
would become slow and during slow times of the year ROP would be set too high.

Answer to the question no 26

Given that:

¯d: 5 boxes per week


αd: . 5 boxes per week

LT: 2 weeks

S: $2

H= $.20 per box per year

a. We know a year has 52 weeks, determine the EOQ:

D: 52x5=260

Qo = 72.11 =72 units

b. If Rop= 12, determine risk of a stock out:

ROP: ¯d(LT)+z(αd)√𝐿𝑇

Plugging in values and solving for z:

12=10+.707z

2=.707z

Z=2/.707=2.83

From appendix B, Table B, the lead time service level is .9977

Risk of stock out = 1-.9977=.0023=23%


Answer to the question no 27

Given,

d = 80 lb./day

d = 10 lb./day

LT = 8 days

LT = 1 day

Determine the ROP that would provide a stockout risk of 10%

Service Level = 1 - .10 = .90

Using Appendix B, Table B, we look for the z value corresponding to .90.

The closest probability is .8997, which corresponds to z = 1.28.

ROP = (80*8 )+ 1.28 √( 8*102)+ ( 802 * 12)

= 640 + 108.61

=749

Answer to the question no 29

Given that,

D= 1200 cases

S= $40 per order

H= $3 per case per year

Service level= 99%

a. Determine the optimal order quality :

Qo = 178.89 =179 units


b. Determine the level of safety stock if lead time demand is normally distributed with
mean of 80 cases and standard deviation of 6 cases:

EDDLT= 80

αd.T =6

Using appendix B, Table B, we look for the z value corresponding to 0.99.

The closest probability is .9901, which corresponds to z= 2.33

SS= Zα dLT=2336(6) = 13.98=14 round.

Answer to the question no 30

Given that, αd= 14 gallons

LT= ½ week d=250gallons

Z(98%)=2.06

a. Negative safety stock implies overstock and when there is overstock, there is no use of
safety stock

Ss = Z

x ½+ 62 x 2502

=2039

=20.4

b. Expected number = probability of stock out X d

=7% X 250
= 5 gallon

So unit Stock will be zero.

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