343 Test 3

~NG 343

EXAM 3A

30 Questions:

1.

April 18, 2006

20 p~oblems worth 4 points each and 10 questions worth 2 points each.

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What is the Economic Order Quantity (EOQ) for the Lanier Mfg Co.? The Lanier Manufacturing Company purchases part Al 00 to use in their assembly process. They have a monthly demand of 1,500 units, The ordering cost = $70. Days per year that the company works = 250. The carrying cost rate = .22. The unit cost = $25. n\.J ::: I)_. x: "/J I'"0[" \ I~ 0 D () '\..

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I What is the Economic Production Order Quantity (POQ) for the Widget Company? The co. is experiencing problems with the manufacture of part Cll1. The forecast for unit sales is 60,000 for next year. The production rate used in the factory is 400 parts per day. The Ordering cost is $75 per order. The factory works 250 days per year. Inventory Carrying Cost is .30. The Unit Cost for part Clll = $100. v

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~!a~ is savings or loss in total costs for the year if the co. accepts the 5% reduced price? Given: The Big Bear Co. has the opportunity to purchase part XYZ (monthly usage is 200) at a 5 percent reduction if they order in lot size of 1,200. Note: indicate savings with a (+) and a loss with a (-). Present unit cost = $35, ordering cost = $75 per order, present lot size = fixed order quantity = 200, and the carrying cost rate = .25.

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Given: John Marshall, Material Manager for the Yellow Bird Co. was able to produce the exact amount of product and sales in year 2004 as in year 2005 with only 90% of the monthly Average Inventory Value he had in 2004. The 'Average Inventory Value" for the company in 2004 was $1,000,000. The carrying cost rate for the company for both years was/45>, ...--

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is the savings (+) or loss (-) in the year 2005 inventory carrying costs? 1/' 0. 0 0 I 00 () y 333 . 900fGO {) u/

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Given: The Blue Duck Co. had a monthly average inventory for the year 2005 of $24 million. They make three products. They have determined other company costs for the year 2005: Warehouse Rent $900,000 Taxes on inventory $100,000 Cost of capital $3,000,000 InsuraI).ce on inventory $60,000 Warehouse labor $500,000

Obsolescence Warehouse storage racks -Factory lent Pilferage, Spoilage

$240,000 $500,000 .~ $200,000

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What is the expected inventory carrying cost rate (k) for year 2005?

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Given: The Ritz Manufacturing Company makes one product Parts X. The selling price, Unit Cost and the number of units sold for year 2005 is shown in the table below. Total investment = Average Inventory plus $100, 000 for equipment and cash. Fixed Costs = $1,000,000. AVG. Monthly Inventory = $800,000. Part

Price DC Sold $60 $50 $35 $45 50,000 40,000

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What is the Inventory Turns (IT) for the year 2005? (1 decimal)

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What is the Return on Investment (ROI) for the year 2005? (1 decimal)

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.l 1001000 Given: The Red Dog Co. orders 200 part ABCl each time they order. The annual demand is 2400 units. The company works 240 days a year. <;-0 OrO

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(A) What is the Ordering Costs (S) for the Master Co. for purchase orders? (B) What is the Ordering Cost (S) for manufacturing Part A223?

Given: Yellow Co. makes 3 parts (X, Y, Z) and the total labor required to produce each unit of X is 5 hr, Y is 3 hr, and Z is 4 hours. The company has decided to let the Master Production Scheduler balance the work force by changing the MPS for Part Y. Using just weeks one and two, the total Part Y's required is 200. Therefore to balance the work force, how many units ofY should be scheduled in week 1 (the remainder of the 200 would then be scheduled in week 2). The Master Production Schedule for their three products for first 12 weeks of the year is: 12 2220 571oo120 4 140 100 o 200 0 400 100 140 10 1683 9 .1;-1200 120 200 140

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(A)What is the Production Plan in total units for the month of January? (B) How many Y's to be scheduled in WK 1 to balance total labor needs for WKs 1& 2. 1&

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Given: Company XYZ has a carrying cost rate of .25 and a Unit cost of $60 for Part A. The ordering cost of$300. Using Fixed Period Order (FPO) the period = 3. No inventory on hand. FOQ is the Fixed Order Quantity lot-sizing technique.

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Note: Holding cost i~ the same as carrying cost. !eriods Jan Feb Mar Apr 40 Requirements 50 50 50

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(A) What is inventory carrying cost for Part A (for 6 periods) using a FOQ (l00 units) lot-size (B) What is the ordering cost for Part A (for 6 periods) using a FOQ (l00 units) lot-size

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Given: The Frantic Widget Co. makes Widgets. They are experiencing inventory problems for a component part XYZ. Given: The following data: • Monthly demand ,= 1000 units • Lead time = 3 months Mean Absolute Deviation of Demand vs. Forecast = MAD = 50 Forecast period = 8 weeks -: ll'f\Q II1 h r Probability factors:

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(A) What is the safety stock amount for a service level of92%?

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On the attached Master the NET MRP for Part the NET MRP for Part the NET MRP for Part

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Production Schedule (MPS), Product structure and MRP Worksheet for Part A. A on the Worksheet attached: B on the Worksheet attached: C on the Worksheet attached:

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Using the Product Structure for Part A above, if there are no parts in stock, and we need 300 Part A's then what is the gross requirements for Part E? L-l
Given: The Rain Barrel Manufacturing Company produces short runs that they ship to hardware stores. The company wants to reduce inventory by changing to a "Kanban" system. They developed the following data. WeekI Demand Production Lead Time Safe Stock Container Size 20. __

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21. A system that provides feedback to the capacity plan, MPS, and production plan is \© Closed-loop MRP d. MRP II b. Enterprise Resource Planning e. Materials Requirements Planning c. Distribution Requirements Planning

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planning, sending the lot to two different machines for the same operation is called: { ®In capacity overlapping c. capacity splitting e. none of the above b. lot splitting

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23. Which of the following is NOT a condition that favors the success of Vertical integration? a. availability of capital small market share b. availability of management talent e. all of the above c. required demand

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24. What is the objective (2 parts) of the Purchasing Activity as per the Purchasing handout?

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25. List the steps you would follow to do an ABC analysis of your company's inventory parts using annual dollar volume method Fr'",d

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28. The Lean Manufacturing checklist is called the 5Ss are -list all five components that start with an (s).

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30. Chapter 16 lists 6 concerns of suppliers on entering into a TIT partnership.

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Bonus: Explain the difference between these two purchasing negotiation strategies: "cost-based price model" and "market-based price model"

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Bonus: How does a person in the inventory management field obtain professional certification, what is the certification called, and what professional organization gives the certification. (Hint there are two of them, please name one of them)

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Do an MRP Work Sheet for Part A, Part B, and Part C. The Master Production Schedule (MPS) and Product structure for Part A is shown on the MRP Worksheet. Part A product structure is given below. Note: Take into account the beginning on-hand inventory amount and any scheduled receipts given. Take into account the lotsizes given, lead-times given and any need for to carry safety stock. Note: just put in the gross requirements, projected available inventory, planned receipts, and any planned order releases for each part. IExam 3A

IMRP Work Sheet

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Master Production Schedule

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,/ A 0MAR JUNE APR MAY JULY FEB AUG ,,'X '\IO(} PART 2 l.On D () ')So "0f');)0(') {)Q ~~, ,no ~O\,,' Proj. Avail. Bal.

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