Problem 1:
(a) Do you agree with the following statement: "According to the EOQ model, when the setup cost increases, the optimal order size has to increase?" Explain.
(b) Do you agree with the following statement: "The EOQ model aims to make the trade-off between keeping excess inventory and long lead time."? Explain.
Problem 2: Quarter-inch stainless-steel bolts are consumed in a factory at a fairly steady rate of 60 per week (we assume 52 weeks per year). The bolts cost the plant two cents each. It costs the plant $12 to initiate an order, and holding costs per year are 25% of the bolt cost.
(a) Determine the optimal number of bolts (EOQ) for the plant to purchase, the time between placements of orders, and the yearly holding and setup cost for this item.
(b) Although the demand is estimated to be 60 per week, actual demand may turn out to be a different number (e.g. actually 120 bolts are consumed per week). Is there any way to check the robustness of your EOQ calculation process?
Problem 3: FlashPower is a company based in Thailand specialized in producing phone chargers. It received the following two orders: Order 1: 1000 units of model X chargers to be dispatched in period 9; Order 2: 500 units of model Y chargers to be dispatched in period 8. The product structures of the two models of chargers are as shown in the below figure.
![1398_Product structures of two models.png](https://secure.tutorsglobe.com/CMSImages/1398_Product structures of two models.png)
The on hand inventory levels for each item are X = 100, Y = 200, A = 100, B=100, F=50. Safety stocks of 50 units are maintained on product A, B, F. The lot size for items C, D, F are 200, whereas the lot size for all other products are the same as the net requirements (lot-for-lot ordering).
(a) Develop an MRP plan using the Excel file provided. Fill in the form and submit the finished Excel file via blackboard.
(b) Summarize the order release time and quantity using the form below.
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Order Release
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Item
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Period #
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Quantity
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X
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Y
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A
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B
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C
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D
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F
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Problem 4: A company's supply chain configuration is significantly influenced by factors such as its product line (i.e. types of products produced/services provided), marketing strategy and cost structures. The supply chain configuration in turns determines the firm's production plan, material planning and logistics operations. Choose two well-known companies that have different types of supply chain and operation patterns, and explain why such supply chain and operation patterns are appropriate (or not appropriate). You can use the examples discussed in class, but the answers have to be your own.
Problem 5: Describe the different uses of qualitative, time-series, and causal forecasts. Generate specific examples of each that you have seen and analyze why they worked or failed to work".
Problem 6: Business operations are often viewed as a value-adding process. "Inputs" enter the process, are transformed by the process, and the result is "outputs" from the process.
In these exercises we will consider the operations of a fitness center. Fitness centers are quite popular, providing exercise, recreation, and social opportunities for their customers.
Answer the following questions to help you analyze the operations of a fitness center:
(a) What are the major inputs to a fitness center?
(b) How are these inputs used or transformed by the fitness center processes? (List each process, followed by a description of how it is transformed)
(c) What is the output(s) from the service operation process?
(d) How is value added in the service operation process?
(e) What would be a good approach for managing the labor resource at a fitness center's health bar, given that demand is high during meal-times and low at other times?
(f) What would be a good approach for planning the racquetball court capacity at a fitness center?
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