Problem 1:
The local supermarket buys lettuce each day to ensure really fresh produce. Each morning any lettuce that is left from the previous day is sold to a dealer that resells it to farmers who use it to feed their animals. This week the supermarket can buy fresh lettuce for $4.00 a box. The lettuce is sold for $10 a box, and the dealer that sells the old lettuce is willing to pay $1.50 a box. Past history says that tomorrows demand for lettuce averages 250 boxes with a standard deviation of 34 boxes. How many boxes of lettuce should the supermarket purchase tomorrow?
Problem 2:
Gentle Ben's Bar and Restaurant uses 5,000 quart bottles of an imported wine each year. The effervescent wine costs $3 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben figures that it costs $10 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 100 bottles (closed two weeks per year) with a standard deviation of 30 bottles.
Ben would like to use an inventory system that minimizes inventory cost and will provide a 95 percent service probability.
a. What is the economic quantity for Ben to order?
b. At what inventory level should he place an order?
Problem 3:
After graduation, you decide to go into a partnership in an office supply store that has existed for a number of years.Walking through the store and stockrooms, you find a great discrepancy in service levels.Some spaces and bins for items are completely empty; others have supplies that are covered with dust and have obviouslybeen there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands.Most of your supplies are purchased from just a few distributors that call on your store once every two weeks.
You choose, as your first item of study, computer printer paper. You examine the sales records and purchase orders and findthat demand for the past 12 months was 5,000 boxes. Using your calculator you sample some days' demands and estimatethat the standard deviation of daily demand is 10 boxes. You also search out these figures:
- cost per box of paper = $11
- Desired service probability = 98%
- Store is open every day
- Salesperson visits every two weeks
- Delivery time following visit is three days
Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on hand?
Problem 4:
Product A is an end item and is made from two units of B and four of C. B is made of three units of D and two of E. C is made of two units of F and two of E.
A has a lead time of one week. B, C, and E have lead times of two weeks, and D and F have lead times of three weeks.
a. Show the bill of materials (product structure tree).
b. If 100 units of A are required in Week 10, develop the MRP planning schedule, specifying when items are to be ordered and received. There are currently no units of inventory on hand.