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13 views

Assignment

Uploaded by

hatamu nigus
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question1

A company has introduced a process improvement that reduces the processing time
for each unit and increases output by 10% with less material but one additional
worker for the new system. Under the old process, six workers could produce 70 units
per hour. Labor costs are $12/hour, and material cost was $12/unit. For the new
process, material cot is $12/unit and overhead in both system is charged at 2 times
direct labor cost . Finished units sell for $20 for both system.
A) Determine labor productivity for both system.
B) Compute total factor productivity for both old and new systems.
Question2
A company produces certain product at a rate of 500000items/year. The average
demand of this product is only 200000items/year. Hence the manager has decided to
produce in batches. A new stock building is built especially for these products. This
has a cost of 1.5 million dollars. This cost will be linearly depreciated over a period of
20 years. This building can be divided into ten separate rooms by means of
replaceable walls. Each room can be separately heated and can stock 5000 items. In
total 50000 items can be stocked. The heating cost for the complete building is €5000.
There is a also a capital cost of 15% of cost per item and on the top of that an
insurance cost of 5% of the cost per item. Each time the machines must be restarted, a
technician is needed for one day (which has a cost of €500). Restarting the machines
also requires a warm up before we can produce again, thus incurring the extra care
cost of €250. The maintenance of the machine also requires that each time 100000
units are produced, the oil supply of the machine must be refilled. The average
amount of oil has a cost of €100. The product has a price of €25. Answer the
following:
1. How many products must be produced each cycle to have optimal costs? Calculate
also the number of cycles.
2. Calculate the total yearly cost of this inventory policy. What is your conclusion?
Question 3
A purchasing agent for a particular type of silicon wafer used in the production of
semiconductors must decide among three sources. Source A will sell the silicon
wafers for €2.50 per wafer, independently of the number of wafers ordered. Source B
will sell the wafers for €2.40 each but will not consider an order for fewer than 3000
wafers, and Source C will sell the wafers for €2.30 each but will not accept an order
for fewer than 4000 wafers. Assume an order setup cost of €100 and an annual
requirement of 20000 wafers. Assume a 20 percent annual interest rate for holding
cost calculations.
a. Which source should be used, and what is the size of the standing order?
b. What is the optimal value of the holding and setup costs for wafers when the
optimal source is used?
c. If the replenishment lead time for wafers is three months, determine the
reorder point based on the on-hand level of inventory of wafers.
d. Assume that two years have passed, and the purchasing agent must recompute
the optimal number of wafers to purchase and from which source to purchase
them. Source B has decided to accept any size offer, but sells that wafers for
€2.55 each for orders of up to 3000 wafers and €2.25 each for the incremental
amount ordered over 3000 wafers. Source A still has the same price schedule
and Source C want out of business. Now which source should be used?
Question 4
Problems 1 through 6 are based on the following data. Observations of the demand
for a certain part stocked at a parts supply depot during the calendar year 1 999 were

1. Determine the one-step-ahead forecasts for the demand for January 2000 using 3-, 6-, and
12-month moving averages.
2. Using a four-month moving average, determine the one-step-ahead forecasts for July
through December 1 999.
3.Using a four-month moving average, determine the two-step-ahead forecast for July through
December 1 999. (Hint: The two-step-ahead forecast for July is based on the observed
demands in February through May.
4. Compute the MAD for the forecasts obtained in Problems 17 and 18. Which method gave
better results? Based on forecasting theory, which method should have given better results?
5. Compute the one-step-ahead three-month and six-month moving-average forecasts for July
through December. What effect does increasing N from 3 to 6 have on the forecasts?
6. What would an MA(1) forecasting method mean? Compare the accuracy of MA(1) and
MA(4) forecasts for July through December 1 999.

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