Task
The assignment consists of 3 exercises.
Question 1 - Inventory Management
Part A
Riverina Industrial Electronics Distributors (RIED) is involved in distributing electronic components to a range of commercial customers. Average demand for a particular item of the inventory is 640 units per day. Item is sold at the cost of $20.00 a unit from Regional Computing Components. Holding cost is 20% per unit per year. It has been established that cost of each order in the organisation is $200.00 per order. What is the economic order quantity and the total cost for this policy?
Second supplier, InfoSys Parts, intends to sell this item at the cost which is lower ($19.00 per unit). But the minimum order quantity for each order is 10,000 units. Must this item be bought from InfoSys Parts or Regional Computing Components?
(Assume a 5-day working week, and 50 working weeks a year)
Part B
Describe how such a basic mathematical model used in this question (the EOQ or Quantity Discount modes) can be modified to make it more realistic to include features of safety stock and re-order points.
Part C
There are a number of modern inventory control methodologies. Though, not many organizations have adopted them. Describe the reasons that modern inventory control methods and systems are not in popular usage. Discuss also how organisations could be persuaded to adopt modern inventory control methodologies.
Question 2 - Project Management
Part A
Intekma AutoParts (IAP) are planning to expand their factory to cope with extra demand for their products and have requested your help as the external consultant. IAP wants to find out what is involved in the project and how soon it can be finished . They have asked for a plan in the form of a Gantt Chart and Critical Path Network with relevant activity times, project duration and identification of the critical path. In the initial planning stages, you have decided that there are three main components (or sub-projects) in this expansion project - building, processing equipment and material handling system. After spending a few weeks in scoping the work, you have established a list of activities according to the three major components. Details of these are as follows:
BUILDING
A1 Design Building
A2 Ordering of Materials
A3 Construction of Building
PROCESS EQUIPMENT
B1 In house Design of Equipment
B2 Detailed Design by Consultant
B3 Tender Exercise for Equipment
B4 Installation and Commissioning of Equipment
MATERIAL HANDLING SYSTEM
C1 Study of Processing Equipment by Consultant
C2 Design of Material handling Equipment
C3 Purchase of Equipment
C4 Installation and Commissioning
Discussions with contractors and the client have helped you to draw up a table of estimated durations for the activities and the relationships among them as indicated below.
Write the report on the project plan to senior management of IAP, offering sufficient information for senior management to review and understand the implications of embarking on such a project.
Activity Preceding Activity Duration
(in weeks)
A1 None 6
A2 A1 5
A3 A2 1
B1 A1 2
B2 B1 8
B3 B2 4
B4 B3 4
C1 B2 2
C2 C1 4
C3 C2 4
C4 C3 4
Part B
You realise that the information that IAP has requested is inadequate and suitable for only basic planning purposes. In a second section of the report, present your recommendations on what other information is related and what techniques and systems must be used to plan, monitor and control the project.
Question 3 - Transportation problem
Part A
In the past, shipments of blood for 4 hospitals in rural Victoria are co-ordinated from a cental office. The office draws up periodic delivery schedules for 4 main hospitals in the region from blood banks. The blood is shipped from 3 main blood banks. An auditor has found that manual technique involved in deriving the schedules is not cost effective, and the central office has decided to use mathematical modelling for minimising the costs involved.
The first step involved the central office collecting data on average costs, demand and supply. Costs to ship a standard container of blood from each bank to each hospital have been collated and these are provided below. Also listed, in the table, are the numbers of containers available in each blood bank, and the number of containers required by each hospital. All these figures have been based on average weekly requirements and supply.
Hospital 1 Hospital 2 Hospital 3 Hospital 4 Supply
Bank 1 $8.00 $9.00 $11.00 $16.00 100
Bank 2 $12.00 $7.00 $5.00 $8.00 80
Bank3 $14.00 $10.00 $6.00 $7.00 40
Demand 80 80 40 30
As the consultant to the regional blood bank, you need to find out the number of weekly shipments from each blood bank to each hospital. Direct your answers in an attempt to minimise the total costs involved.
Discuss the implications of the solution.
Part B
Describe what other factors you will consider to create a more realistic mathematical model. In your answer, discuss whether you will use a different mathematical modelling technique, or alter the transportation model to include new parameters.