TOBB ETÜ 2015-2016 Spring Semester
END 307- Production Systems Planning
Assignment 3
th
Assignment date: Feb 02 2016 Due Date: Feb 9th 2016 in the class hour
Before you answer, multiply the indicated parameters by Factor X (or 1- Factor X) as shown in the questions
Q1. An automobile mechanic shop installs approximately 95 brake-pads in a month. The manager of
the mechanic shop estimates that in each order of break-pads, they spend about an hour and a half
worker time for the process of giving and receiving an order. A worker is paid 20 TL/hour (xFactor X).
The manager thinks that (20+ 10xFactor X)% annual inventory holding cost rate is appropriate to use.
Supplier of the pads takes 3 weeks to deliver an order, and for each pad the shop pays 20 TL(x1Factor X).
(a) Determine the optimal order quantity that minimizes the annual inventory holding and
ordering costs.
(b) What are the annual inventory holding and annual ordering costs in the optimal solution?
(c) What is the time between orders, and the reorder point?
(d) What is the average inventory level and frequency (number of orders in a year) of orders?
(e) What would be the annual cost if we order every month?
(f) Draw the plot of frequency (number of orders in a year) versus total annual cost. Use
frequencies from 5 to 52. (Generate the plot using excel and attach the plot only)
Q2. A factory is about to produce a new product with demand rate of 190 (xFactor X)units per day. A
component used in the production of the new product is manufactured in the CNC machine owned
by the company. The CNC can manufacture 500 units of the component per day. (1 Year = 50 weeks,
1 week=5days). A setup cost is estimated to be 110 (xFactor X)TL. The cost of holding one unit of
component in the inventory for a year is assumed to be 8 TL.
(a)
(b)
(c)
(d)
(e)
Find the optimal production quantity and the cycle time.
What are the maximum and average inventory levels for the optimal policy?
What is the rate of increase in the inventory level during production time in the cycle?
What percent of the CNC capacity is consumed by the production of the component?
What would be the annual total cost if we use production lot size of 150 units?
Q3. A company wants to order remote control devices. The demand for the device is about
700(xFactor X) per month. The company can buy the devices from either one of the two suppliers
whose price schedules are as given below;
Quantity
1-250
251-499
500+
Supplier A
Unit price
17.80
16.80
16.20
Quantity
1-149
150-349
350+
Supplier B
Unit price
17.90
16.70
16.40
If the fixed order cost is 80 (x(1-Factor X)) TL and the annual inventory holding cost rate is (30+10xFactor
X)%, which supplier should be selected and what should be the order size and what is the corresponding total
annual cost?