BSU Operations Management SC Resource Planning Optimal Order Quantity Worksheet
Question Description
Question 1
Basedon the following historical data, determine the optimal order quantity, safetystock, and reorder point for a perpetual system
cost of placing an order = $29
annual carrying charge = 17%
warehouse capacity = 1000 units
value of an item = $400
annual demand for the item = 2475 units
number of operating days in a year = 360
stockout cost per unit = $29
average lead time = 8 days
standard deviation of lead time = 4 days
standard deviation of daily demand = 3 units
distribution of demand during lead time = normal
Brieflyexplain how this system would work in a company
Question 2
As part of an annual evaluation of its four suppliers of xyz, a firm gathered data on three criteria: on-time delivery, percent defective, and error-free order fulfillment. On-time performance was assigned a rating of 60%; percent defective was assigned a rating of 30%; and error-free fulfillment was assigned a rating of 10%. The data collected over the past year is given below:
|
|
|
|
Error-free |
|
Alpha |
60% |
40% |
90% |
|
Beta |
70% |
30% |
90% |
|
Gamma |
60% |
0% |
80% |
|
Delta |
50% |
20% |
70% |
Based on the firms criteria, if the weighted point approach is used, which supplier performed best? If the dominant characteristic approach is used, which supplier performed best?
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