Module 2 Quiz

IE137 – Operations Management

Answer the following problems completely. Show your complete solutions and BOX your final answers.

1. (10 points) A toy company has an annual demand of 12,500 units. Ordering cost is at PhP 500 per order, and holding cost is
15% of the price. The company is choosing between three price models in which they will receive a discounted price if bought
in bulk. If 200 to 400 items will be bought, the price per unit is at P530; between 500 and 800 units, price would be at P500,
and if 900 units or more will be bought, price would be P475. Calculate the optimal range into which the company should
choose in order to save costs.

2. (10 points) A brewing company orders coffee beans 10 times a year. They currently carry a stock of 500 sacks of coffee beans
a month, but due to changes in demand, they are considering carrying extra stock. Carrying additional sack will cost
PhP1,500, while stock out cost is at PhP750. Below shows the demand distribution and the probability:

Demand during leadtime Probability

500 0.25
520 0.35
530 0.10
540 0.15
550 0.15

3. (10 points) The following shows the demand and capacity of a bakery per month. Create a plan that will yield the least cost, if
there are 100 units on hand at the beginning of the planning period, PhP30 for regular capacity, PhP35 for overtime capacity,
PhP40 for subcontracting, PhP5 for inventory cost, and PhP10 for backlog cost.

March April May

Regular 400 400 400
Overtime 200 210 200
Subcon 180 190 185
Demand 800 900 600

4. (10 points) Create an available to promise table for the given information below. Forecast for the eight-planning period is 100,
with MPS equivalent to 250 and 100 units on hand.
Period 1 2 3 4 5
Customer order 150 120 40 80 100

5. (10 points) A chocolate factory has the following demand in boxes, wherein each box contains 36 chocolate bars, over an eight-
month period. Create an aggregate plan that will satisfy the factory’s requirement of keeping no inventory by the end of the
planning period. They will be adapting level production, with allowable overtime, but is only limited to five periods. There are
100 boxes available to use as beginning inventory. In periods of high demand, they can tap in a third-party partner where they
can outsource the factory’s production. Subcontracting will on an as-needed basis. Backordering is also allowable.
Month 1 2 3 4 5 6 7 8
Demand 300 1500 800 1300 1200 1400 400 1600

Cost Capacity
Regular 100 800
Overtime 120 300
Subcon 150
Inventory 5
Backlog 10
 D 12 500 units Price
Range
=

8 F500
=

200
-

400 *
530

H 0.15D
=
500
-

800 500

900 t 4 Es

Q =

2(12500)(500) 396.55 units

=
in
range
0.15(580)

Q2 2(12500)(500):408.
=

units
25 adjust
0.15(500)

Q0 2(12500)(500)
=

418.85
=

units adjust
0.15(475)

550(12500)
X

74:396.53 t 12500(500) +
F6640766. 72
=

0.15(530) 896.53x
↑

800 (500 500(12 50) *6257828.

12000
=

R2 = I +

0.15(500)

18 900
:

t 12 300(500) 475(12500)
+
:
*5944457.08

0.15(475) 900

:
Bulk order of more than 900 units will yield the least cost.
 #of orders 10 times a
year
=

current ROP =

500 sacks

H F 1500 per
=

sack

~c F750 per sack

=

Demand & LT Probability -S HC Z

probability
units short a

500 0.25 0 0 20(0.35) 50(0.10) 40(0.15) 50(0.15)

+
+ +

23.50
=

520 0.35 20 20(1500) 10(0.10) 20(0.15) 30(0.15)

+
+

17.50
=

530 0.10 30 30(1500) 10 (0.15) 20(0.15)

+

4.50
=

540 0.15 40 40(1500) 10 (0.15) 1.50

=

558 0.15 50 50(1500) 0

-S HC SC total cost

0 0 23.50 (10) (750) -176250

20 20(1500) 17.50 (10) (750) P161250

30 30(1500) 4.50(10) (750) -78750

40 40(1500) 150 (10) (750) 77250

-

50 50(1500) 0 (10) (750) -7500

.ROP of 500 stock will yield least cost.

+ 40 safety the
③
supply: Demand costing
800 30
Beg, inventory 100 Mar
Reg
= =
:

Reg 400(3)
=

Apr =900 Or 85
=

Of =200(2) 210 may 600 SC 40

=

+ =

I -180 190 185

+
+

2300 In=5

2465
units Backlog 10
:

Dummy (demand) 2465 -2300

=

units
-165

march April may Dummy

O 5 10 ⑧
in 100 -- to
Beg.
-

30 35 40 O
-
Regular 400 --
O
35 40 45 O
Overtime 200 - - - 200
-

40 45 - 50 0
subcon 100 - 80 180
- ⑧

40 30 35 O

Regular -
400 - - O
45 85 40 O
over time
-
210 - -
210
-

⑧
50
190 40 45
190
subcon - - - -

- 50 40 30 0
Regular -
400 - ⑱O
55 35 O
- - 45 o
overtime 200 -

60 50 40 0
subcon - 100 - 85 06 5

Demand 800
- 900
- ⑳ 165
Fo 5
too -
300
- 0 O 0
100 to

0 O

400(30) 200(35) 100(40)

I
Total cost
+ +

400(3) 210(35 190(40) 100(50)

+
+
+
=

073958
400(80) 200(85) +
 MPS table:
④

period Beg, inventory Demand or Forecast End inv MDS Iny after MPs
1
100 150 (50) 250 200
2 80
200 120
3
⑧8 100 (20 250 230

4 230 108 130

5 180 100 80
O 30 100 (70) 250 180

7 180 100 80

g 80 100 (ed 250 280

ATP table

Beg.in 100
=

period 1 2345 6 I ⑧

customer order ⑱120 100

MPS 250 250 250 250

ATP 88 38 250 250

 TRIAL 1
⑧
⑤ 234567
1
month
Demand 300 1500800 1300 1200 1400 400 1600

capacity
800 800 800 800 800 800 800 800
Reg
Ot 800 300 300 300

-C 100 200 700 300 100

800 900 800 1800 1200 1400 800 1200

Total

Out to recast
-

500 600 0 0 O O 400 (400

Inventory
600 O 0 O 0 O 400
Beg 100
End 600 0 0 0 O 0 400 O

Ave 350 300 -

-
-
-

200 200

Backlog
-
-
- - - - -

costing:
Regular 800(8) (100)
overtime 300 (D) (120)

subcon 1400 (150)

Inventory 1050(5)
856570
*
 TRIAL 2 Lot g periods my high demand

month 1 234 547 ⑧

Demand 300 1500 800 1300 1200 1400 400 1600

capacity
800 800 800 800 800 800 800 800
Reg
Ot 800 300 300 300 300

-C 100 300 100

800 1108 800 1100 1200 1400 800 1200

Total

Out to recast
- 500 (400) 0 (200) 00 400 (4007

Inventory
100 600 200 200 O O O 400
Beg
End 600 200 200 0 0 0 400 O

Ave 300 400 200 100

- -
200 200
-
-

Backlog
-
- - - -
-

costing:
Regular 800(8) (100)
Overtime 300(5) (120)
subcon 500(150)
Inventory 1400(5)
*90200

#1 F856570 - LEAST COST

#20902000