Assignment # 6

Assignment # 6

Schedule: Today’s Date: Thursday, February 23 2017

· Friday: Do problem 1 (1hours)

· Saturday: Do problem 2 (1 hours)

· Sunday: Do Problem 3 (1 hours)

· Monday: Do Problem 4 (PROFESSOR BACKLOGGED TO HW 7)

· Tuesday: review (1 hour)

· Thursday: Turn in

Problem 1

1. Define the problem

· I need to complete Exercise 11.2 in the class textbook; defined below:

1. Plan the treatment of the problem, i.e., the way in which you going to structure your analysis of the given information in order to solve the problem. Define the process (logical set of steps) for solving the problem by carefully addressing the following questions:

· What information is available for solving the problem?

· This question problem was explained in class so I will use my lecture notes.

· What assumptions need to be made to make the solution process manageable?

· I will need to make assumptions when comparing this problem to 11.1 (HW 5) because I turned in handwritten notes and don’t have a copy.

· What is the issue tree, if any, for the problem?

· I will provide a table of equations for how I calculated the SS and OUL.

· What analysis needs to be performed to resolve the issues defined in Step 1?

· The store manager in switching from a continuous to a periodic review of the store’s inventory.

· Therefore, the inventory is measured out in periodic intervals of one week. At the said week, an order is placed to replenish inventory to a specific level (OUL).

· Mathematically, this is periodic is similar to continuous review except:

Lead Time* = (Tr + L) where Tr = review period

· In our case: TR = 3 since the store manager plans to order every 3 weeks, therefore:

Lead Time* = (Tr + L) = (3+2) = 5 =Lead Time*

(Note: L was provided in 11.1)

· Now we just calculate the SS and OUL

SP1. Calculate Safety Stock

SP2. Calculate OUL

SP3. Analysis

1. Execute the plan:

SP1. Calculate Safety Stock

Safety Stock = () Dw ) ( CSL)

Motorolas SS under continuous review:

Safety Stock = () (200 ) ( 1.65) = 466.69 467 (Note: CSL and was given in 11.1)

Motorolas SS under periodic review:

Safety Stock = () (200 ) ( 1.65) = 737.90 738 Safety Stock Inventory

SP2. Calculate OUL

Mean Demand of periods T and L = (T+L)(Mean Demand)

= (5)(300)

= 1500 (Note: Mean Demand was given in 11.1)

OUL = (Mean Demand of periods T and L) + SS

= 1500 + 738 = 2238 OUL

SP3. ANALYSIS: Periodic Review requires that there be a greater Safety Stocky quantity because the OIL is placed after the Review (T) and Lead (L) periods, after the current supply is exhausted. Meaning that there is no inventory in stock during the Lead Time and SS must then be used

1. Check your work

· Is the work correct in every detail?

· The numbers match the numbers given in class so yer it is correct

· Are my assumptions reasonable?

· Yes my assumptions are reasonable, I was actually able to get all need information out of the text as well

· In terms of the things I know, do the results make sense?

· Yes the results make sense

Problem 2

1. Define the problem

· I need to complete Exercise 11.3 in the class textbook; defined below:

1. Plan the treatment of the problem, i.e., the way in which you going to structure your analysis of the given information in order to solve the problem. Define the process (logical set of steps) for solving the problem by carefully addressing the following questions:

· What information is available for solving the problem?

· This question problem was explained in class so I will use my lecture notes.

· What assumptions need to be made to make the solution process manageable?

· I will need to make assumptions when comparing this problem to 11.1 (HW 5) because I turned in handwritten notes and don’t have a copy.

· I am also assuming that the company still has the same 0.95 CSL

· What is the issue tree, if any, for the problem?

· I will provide a table of equations for how I calculated the SS using the fill rate and ROP.

· What analysis needs to be performed to resolve the issues defined in Step 1?

SP1) Calculate SS for 99% fill rate.

Given Variables:

Ronald Morris

Tim 105 Group 9

Subhas Desa

Due March 2 2016

Lead Time = 2 = L

Fill Rate = 99% = Fr

Ql = 500

AvgDw = 300

= 200

Goal: Safety Stock using the fill rate.

The professor has instructed that he wishes this to be done on Excel, so I will automate to process across multiple columns in Excel.

Column 1

· Column one will hold the SS

· Safety Stock will change depending on the a constant (K) multiplied by the standard deviation.

· K+i where i = each row down the excel sheet

Safety Stock = () Dw ) ( CSL)

Column 2

· Column to will hold the Z score in the probability function

= f(z = ss/DL) = (1/2pi)(e-(z^2)/2)

Column 3

· Column 3 will hold the CSL

· This is computed by dividing the safety stock by the standard deviation of lead time and the looking up that number on the statistics table to get the CSL percentage.

CSL = F(z = ss/DL)

NOTE: DL = = = 424.26

Column 4

· Column 4 will hold the ESC (Expected Shortage during replenishment Cycle)

ESC = -ss[1-F(z = ss/DL)] + * f(z = ss/DL)

Column 5

· Column 5 will hold the Fill rate. I will have my desired safety stock when the Fr = 99%

Fr = 1-ESC/QL

SP2) Calculate the ROP

ROP = Lead TIme Demand + Safety Stock

1. Execute the plan:

SP1) Calculate SS for 99% fill rate.

The necessary Safety Stock to have 99% Fill Rate is 1400 Safety Stock

SP2) Calculate the ROP

ROP = 2*600 +1400 = 2600 inventory

The manager will send an order to resupply once the inventory quantity = 2600 inventory

Assuming the manager wants a 99.55 fill rate.

Problem 3

1. Define the problem
2. Plan the treatment of the problem, i.e., the way in which you going to structure your analysis of the given information in order to solve the problem. Define the process (logical set of steps) for solving the problem by carefully addressing the following questions:

· What information is available for solving the problem?

· Information is available on lecture notes and i the textbook.

· What assumptions need to be made to make the solution process manageable?

· Assuming lecture notes are correct

· What is the issue tree, if any, for the problem?

· Will use the same automated table for 11.3

· What analysis needs to be performed to resolve the issues defined in Step 1?

Given Variables:

Dw = 250

SD = 150

QL = 1000

ROP 600

Lead Time = 2

SP1) Calculate the CSL

SP2) Calculate the Safety Inventory

SP3) Calculate the Fill Rate

1. Execute the plan:

SP1) Calculate the CSL

CSL = F(z = ss/DL = (ROP – (DL)M))/DL

NOTE: DL = = = 353.55

CSL = F(ROP – (DL)M)/DL

CSL = F(600 – 500)/353.55 = F(0.2828)

Using the T Chart:

Therefore: The CSL level is 0.6103 or 61%

That could definitely be higher. The business really needs to improve its product availability.

SP2) Calculate the Safety Inventory

Safety Stock = () Dw ) ( CSL)

Safety Stock = () (150 ) ( 0.2828) = 59.99 = 60 Printers

SP3) Calculate the Fill Rate

Column 1

· Column one will hold the SS

· Safety Stock will change depending on the a constant (K) multiplied by the standard deviation.

· K+i where i = each row down the excel sheet

Safety Stock = () Dw ) ( CSL)

Column 2

· Column to will hold the Z score in the probability function

= f(z = ss/DL) = (1/2pi)(e-(z^2)/2)

Column 3

· Column 3 will hold the CSL

· This is computed by dividing the safety stock by the standard deviation of lead time and the looking up that number on the statistics table to get the CSL percentage.

CSL = F(z = ss/DL)

NOTE: DL = = = 424.26

Column 4

· Column 4 will hold the ESC (Expected Shortage during replenishment Cycle)

ESC = -ss[1-F(z = ss/DL)] + * f(z = ss/DL)

Column 5

· Column 5 will hold the Fill rate. Fr = (1-ESC)/QL

After applying the given variables to my automated excel sheet. The Fill Rate for 60 Safety Inventory printers is 0.47

1. Check your work

· Is the work correct in every detail?

· Yes my work is correct

· Are my assumptions reasonable?

· My assumptions are

· In terms of the things I know, do the results make sense?

· They do, however note I did the F and f functions on a calculator then typed into the excel. I will provide the printouts of the Excel next.

Please let me know if you would like the Excel file: rnmorris@ucsc,edu