ADDITIONAL PROBLEMS

Attempt as many as you can There may be problems that were not covered n yo!r class th s semester " #nore those

IN$ENTOR% MANA&EMENT' 1. The following table contains figures on the annual volume and unit costs for a random sample of 16 items for a list of 2000 inventory items at a health care facility. Item 1 2 ! 5 6 7 # " 10 11 12 1 1! 15 16 (n t )ost (sa#e 75 0 27! 20 "7 1 1 " 2! !1 20 12 2! 7" 1" 72 22 11! 55 270 105 5"! 55 !#2 5 1"# !0 7 12 215 20 116

$evelop an A%& classification for these items. 2. A large ba'ery buys flour in 25(pound bags. The ba'ery uses an average of !#60 bags a year. )reparing an order and receiving a shipment of flour involves a cost of *!+order. Annual carrying costs are * 0 per bag. a. $etermine the economic order ,uantity. b. -hat is the average number of bags on hand. c. /ow many orders per year will there be. d. &ompute the total cost of ordering and carrying flour. e. 0f ordering costs were to increase by *1 per order1 how much would that affect the total annual cost. Sol!t on' 6 bags1 1# bags1 1 51 *10#01 increase by *127.!# . A hardware store sells appro2imately 271000 cans of a white paint a month. %ecause of storage limitations1 a lot si3e of !000 cans has been used. 4onthly holding cost is 1# cents per can1 and reordering cost is *60 per order. The company operates an average of 20 days a month. a. -hat penalty is the company incurring by its present order si3e on annual costs. b. The manager would prefer ordering 10 times each month but would have to 5ustify any change in order si3e. 6ne possibility is to simplify order processing to

reduce the ordering cost 7say using web orders8. -hat ordering cost would enable the manager to 5ustify ordering every other day. Sol!t on' *161 *52.06 !. *I+ ,!ant ty d sco!nts have been covered n class- A mail order house uses 1#000 bo2es a year. &arrying costs are 20 cents per bo2 a year1 and the ordering costs are * 2. The following price schedule applies. N!mber o+ Bo.es 1000 to 1""" 2000 to !""" 5000 to """" 10000 or more $etermine the optimal order ,uantity. Sol!t on' 101000 bo2es 5. 9uppose the e2pected demand during lead time for a particular item is 00 units1 with a standard deviation of daily demand of 0 . 9uppose the lead time is ! days. a. -hat is the reorder point that provides a 1: ris' of stoc' out during lead time. b. The safety stoc' needed to provide a 1: ris' of stoc' out during lead time. c. The safety stoc' needed to provide a 7: ris' of stoc' out during lead time. Sol!t on' ! ".#1 1 ".#1 ##.55 6. 0n the above problem1 if a reorder point of 275 is used1 what is the probability of stoc' out. Sol!t on' 66.15: Pr ce per bo. *1.25 *1.20 *1.1# *1.15

SIM(LATION' 1. A car rental agency has collected data on the demand for lu2ury(class automobiles over the past 25 days. The data are shown below. Da ly Demand 7 # " 10 11 Total N!mber o+ days 2 5 # 7 /0

%ecause customers drop cars at another location1 the agency only has " cars available currently. Assume single day rentals. a. ;se the following five random numbers to generate 5 days of demand for the rental agency< 15 !# 71 56 "0. b. -hat is the average number of cars rented for the 5 days. c. /ow many rentals will be lost over the 5 days.

d. -hat is the average daily demand for the 5 days. Sol!t on' b1 212 cars3 c1 4 lost on day 53 / lost on day 03 d1 617 cars 2. A service technician for a ma5or photocopier company is trained to service two models of copier< the =100 and the =200. Appro2imately 60: of the technician>s service calls are for the =1001 and !0: are for the =200. The service time distributions for the two models are as follows< 8499 )op er T me *m nsRelat ve :re, 25 0.50 0 0.25 5 0.15 !0 0.10 8/99 )op er T me *m nsRelat ve :re, 20 0.!0 25 0.!0 0 0.10 5 0.10

a. 9how the random number intervals that can be used to simulate the type of machine to be serviced and the length of the service time for each model. b. 9imulate 20 service calls. -hat is the total service time spent on the 20 calls. Sol!t on' abo!t 050 m n!tes See E.cel sol!t on on webs te . Three discount pharmacies 79uper ?1 $evco1 and @loorgreen8 compete for business in a suburban area. &ustomers often ma'e a purchase at one of the stores and then ma'e their1 ne2t purchase at another store. The matri2 below shows the probability that a customer will switch stores from one purchase to the ne2t. )!rrent P!rchase 9uper ? $evco @loorgreen S!per ; 0.70 0. 0 0.10 Ne.t P!rchase Dev)o :loor#reen 0.10 0.20 0.55 0.15 0.10 0.#0 Total 1.00 1.00 1.00

a. 9how the probability distribution and the intervals of random numbers that could be used to generate the ne2t purchase for a customer who last made a purchase at 9uper ?. b. Aepeat part 7a8 for a customer who last made a purchase at $evco. c. Aepeat part 7a8 for a customer who last made a purchase at @loorgreen. d. Bary /atcher made his last purchase at 9uper ?. ;se the following four random numbers to simulate the store at which he ma'es his ne2t four purchases< !21 #11 161 57. Sol!t on' See E.cel sol!t on on webs te !. The Cew Dor' &ity corner newsstand orders 250 copies of The Cew Dor' Times daily. )rimarily due to weather conditions1 the demand for newspapers varies from day to day. The probability distribution of the demand for newspapers is as follows< < o+ newspapers Probab l ty 150 0.10 175 0. 0 200 0. 0 225 0.20 250 0.10

The newsstand ma'es a 15(cent profit on every paper sold1 but it loses 10 cents on every paper unsold by the end of the day. ;se 10 days of simulated results to determine whether the newsstand should order 2001 2251 or 250 papers per day. -hat is the average daily profit the newsstand can anticipate based on your recommendation. Reven!e Mana#ement n S!pply )ha ns' 7if covered in class8 1. @elgas1 a manufacturer of felt gas'ets1 has production capacity of 1000 units per day. &urrently1 the firm sells production capacity for *5 per unit. At this price1 all the production capacity is boo'ed about one wee' in advance. A group of customers have said that they would be willing to pay *15 per unit if only @elgas accepted their orders on the last day. The demand from this high paying segment is normally distributed with a mean of 250 and a standard deviation of 100. /ow much capacity should @elgas reserve for the last day. Sol!t on' 2" units of capacity See E.cel sol!t on on webs te
Bon!s' 9uppose the high paying demand distribution was uniformly distributed between 175 and 251 how much capacity should be reserved. Sol!t on' 275 units of capacity 7/int< use the same methodology as used for Cormal1 e2cept that now you cannot use a Cormal table. @or uniform distribution you really donEt need a table8.

2. A manufacturer sources several components from &hina and has monthly transportation needs that are normally distributed with a mean of 10 million units and a standard deviation of ! million. The manufacturer must decide on the portfolio of transportation contracts to carry. A long term bul' contract costs *101000 per month for a million units. Transportation capacity is also available in the spot mar'et at an average price of *121500 per million units. /ow much transportation capacity should the manufacturer sign a long(term bul' contract for. Sol!t on' 6.6 million units See E.cel sol!t on on webs te =AITIN& LINES 7Cote< taF1+arrival rate and tsF1+service rate. 0f no ca or cs is given1 assume them to be 1 7)oisson88 1. The reference des' of a university library receives re,uests for assistance. Assume that a )oisson probability distribution with a mean rate of 10 re,uests per hour can be used to describe the arrival pattern and that service times follow the e2ponential probability distribution with a mean service rate of 12 re,uests per hour. a. -hat is the average number of re,uests that will be waiting for service. b. -hat is the average waiting time in minutes before service be(ins. c. -hat is the average time at the reference des' in minutes 7waiting time plus service time8. Sol!t on' 714>3 917/hrs3 910hrs

2. Agan 0nterior $esign provides home and office decorating assistance to its customers. 0n normal operation1 an average of 2.5 customers arrive each hour. 6ne design consultant is available to answer customer ,uestions and ma'e product re(commendations. The consultant averages 10 minutes with each customer. a. &ompute the length of the ,ueue and the waiting times1 assuming )oisson arrivals and e2ponential service times. b. 9ervice goals dictate that an arriving customer should not wait for service more than an average of 5 minutes. 0s this goal being met. -hat action do you recommend. c. 0f the consultant can reduce the average time spent per customer to # minutes1 what is the mean service rate. -ill the service goal be met. Sol!t on' a1 91/6>3 >147m ns b1 No1 Increase serv ce rate or h re a second cons!ltant c1 >10 c!stomers?hr3 L,@914AA>3 =,@7 m ns1 %es1 . @ore and Aft 4arina is a newly planned marina that will be located on the 6hio Aiver near 4adison1 0ndiana. Assume that @ore and Aft has decided to build a doc'ing facility where one boat at a time can stop for gas and servicing. Assume that arrivals follow a )oisson probability distribution1 with a mean of 5 boats per hour1 and that service times follow e2ponential probability distribution1 with a mean of 10 boats per hour. &onsider the following ,uestions< -hat is the average number of boats that will be waiting for service. -hat is the average time a boat will spend waiting for service. -hat is the average time a boat will spend at the doc'. 0f you were the management of @ore and Aft 4arina1 would you be satisfied with service level your system will be providing. Sol!t on' 910 boats3 A m ns3 4/ m ns !. The management of the @ore and Aft 4arina in the above problem wants to investigate the possibility of enlarging the doc'ing facility so that two boats can stop for gas and servicing simultaneously. Assume that the mean arrival rate is 5 boats per hour and that the mean service rate for each of the channels is 10 boats per hour. -hat is the average number of boats that will be waiting for service. -hat is the average time a boat will spend waiting for service. -hat is the average time a boat will spend at the doc'. 0f you were the manager of @ore and Aft 4arina1 would you be satisfied with the ( service level your system will be providing. Sol!t on' 9195 boats3 917 m ns3 A17 m ns 5. &onsider a two(channel waiting line with )oisson arrivals and e2ponential service times. The mean arrival rate is 1! units per hour1 and the mean service rate is 10 units per hour for each channel. a. -hat is the average number of units in the system. b. -hat is the average time a unit waits for service. c. -hat is the average time a unit is in the system. Sol!t on' 4150 c!stomers n ,!e!e3 /1>0 n systemB 01>A m ns3 441>A m ns a. b. c. d. a. b. c. d.

6. 4elvin>s 4ar'et has an Ge2pressG chec'out for customers with twelve items or less. The inter(arrival time for customers at the e2press chec'out has an e2ponential probability distribution with a mean time between arrivals of "0 seconds. The chec'out time for a customer at the e2press chec'out has an e2ponential probability distribution with a mean chec'out time that depends on whether a cashier has the help of a bagger. -ith a bagger>s help1 the average time a cashier needs to chec' out a customer is 50 secondsH without a bagger>s help1 the average time is 72 seconds. &onsider the situations in which a cashier has and does not have a bagger>s help1 and construct a table that compares these situations with respect to the following operating characteristics< a. The average number of customers in ,ueue at the e2press chec'out. b. The average total time a customer spends at the e2press chec'out. Sol!t on' = th ba##er' @793 @>/3 L,@91A63 =tot@4122 m ns = tho!t ba##er' @793 @093 L,@51/3 =tot@A19 m ns 7. To promote its reputation for fast service1 Iarl>s -hile(;(-ait Automotive Tune(up 9hop promises to reduce a customer>s bill by *0.20 for every minute the customer must wait until his or her car>s tune(up is finished. The inter(arrival time for Iarl>s customers has an e2ponential probability distribution with a mean arrival rate of 5 customers per hour. The time re,uired by a mechanic to perform a tune(up has an e2ponential probability distribution with a mean tune(up rate of 2 cars per hour. Iarl is considering maintaining a staff of 1 !1 or 5 mechanics. A mechanic>s salary is *20 per hour. $efine Iarl>s total hourly cost as the sum of two components< 718 the cost per hour of the mechanics and 728 the profit lost per hour because of reductions of customers> bills. Istimate the total hourly cost if Iarl employs 1 !1 or 5 mechanics. -hich number of mechanics results in the lowest total. Sol!t on' C45/1453 C44A1793 C45410A1 )hoose 7 mechan cs See E.cel sol!t on on webs te Mater al Re,! rements Plann n#' 7if covered in class8 1. A table is assembled using three components1 2= of -ood sections1 = of %races and != of Jegs. The company that ma'es the table wants to ship 100 units at the beginning of day !1 150 units at the beginning of day 51 and 200 units at the beginning of day 7. Aeceipts of 100 wood sections are scheduled at the beginning of day 2. There are 120 legs on hand. An additional 10: of the order si3e of legs is added for safety stoc'. There are 60 braces on hand and no safety stoc' is re,uired for it. Jead time in days for all items is as follows< 0f ,uantity ordered is 1(2001 lead time is 1 day1 for 201(550 it is 2 days1 and for 551(""" it is days. )repare an 4A) plan using lot(for(lot ordering. Sol!t on' See E.cel sol!t on on webs te 2. The %64 for an item is as follows. )roduct A consists of % 71=8 and $72=8. Ivery % in turn consists of &72=81 and every $ consists of %71=8. 0f the 4aster )roduction 9chedule of A has a re,uirement of 500 units in wee' 61 and the lead time for assembly of A is 1 wee'1 develop the 4A) plan for %1&1 and $ for the ne2t 6 wee's given the following information. Item Data cate#ory B ) D

Jot si3ing rule 9afety 9toc' Jead time 9ch Aeceipts %eg. 0nventory

@)7 8 50 1 wee' Cone 50

46KF1500 100 1 wee' 2000 7wee' 18 200

J!J 0 2 wee's Cone 0

Sol!t on' See E.cel sol!t on on webs te LINEAR PRO&RAMMIN& 1. Lelson 9porting I,uipment1 0nc.1 ma'es two different types of baseball gloves< a regular model and a catcher>s model. The firm has "00 hours of production time available in its cutting and sewing department1 00 hours available in its finishing department1 and 100 hours available in its pac'aging and shipping department. The production time re,uirements and the profit contribution per glove are given in the table at the top of the ne2t page. Model Re#!lar #love )atcherEs #love )!tt n# and Sew n# 1 2+ Prod!ct on T me *ho!rs: n sh n# PacD and Sh p 1+2 1+ 1+# 1+! Pro+ t?&love *5 *#

Assuming that the company is interested in ma2imi3ing the total profit contribution1 answer the following< a. -hat is the linear programming model for this problem. b. @ind the optimal solution. /ow many gloves of each model should Lelson manufacture. c. -hat is the total profit contribution Lelson can earn with the above production ,uantities. d. /ow many hours of production time will be scheduled in each department. Sol!t on' b1 0993 409 c1 C5>99 d1 A993 5993 499 See E.cel sol!t on on webs te 2. Dard &are1 0nc.1 manufactures a variety of lawn care products1 including two well('nown lawn fertili3ers. Iach fertili3er product is a blend of two raw materials 'nown as L!0 and L50. $uring the current production period1 "00 pounds of L!0 and !00 pounds of L50 are available. Iach pound of the product 'nown as GBreen JawnG uses +5 pound of L!0 and 2+51 pound of L50. Iach pound of the product 'nown as GJawn &areG uses +! pound of L!0 and 1+! pound of L50. 0n addition1 a current limit on the availability of pac'aging materials restricts the production of Jawn &are to a ma2imum of 500 pounds. Assume that the profit contribution for both products is * per pound. a. -hat is the linear programming model for this problem. b. @ind the optimal solution. /ow many pounds of each product should be manufactured.

Sol!t on' b1 A2>103 0991 50A/10 See E.cel sol!t on on webs te . Breentree Lennels1 0nc.1 provides overnight lodging for a variety of pets. A particular feature at Breentree is the ,uality of care the pets receive1 including e2cellent food. The 'ennel>s dog food is made by mi2ing two brand(name dog food products to obtain what the 'ennel calls the Gwell(balanced dog diet.G The data for the two dog foods are as follows< Do# +ood )ost?o!nce Prote nF :atF BarD b ts *0.06 0 15 )an ne )how *0.05 20 0 0f Breentree wants to be sure that the dogs receive at least 5 ounces of protein and at least ounces of fat per day1 what is the minimum cost mi2 of the two dog food products. Sol!t on' 40oG3 /10 oG C419/0 See E.cel sol!t on on webs te !. )hoto &hemicals produces two types of photographic developing fluids. %oth products cost )hoto &hemicals *1 per gallon to produce. %ased on an analysis of current inventory levels and outstanding orders for the ne2t month1 )hoto &hemicals> management has specified that at least 0 gallons of product 1 and at least 20 gallons of product 2 must be produced during the ne2t 2 wee's. 4anagement has also stated that an e2isting inventory of highly perishable raw material re,uired in the production of both fluids must be used within the ne2t 2 wee's. The current inventory of the perishable raw material is #0 pounds. -hile more of this raw material can be ordered if necessary1 any of the current inventory that is not used within the ne2t 2 wee's will spoil ( hence1 the management re,uirement that at least #0 pounds be used in the ne2t 2 wee's. @urthermore1 it is 'nown that product 1 re,uires 1 pound of this perishable raw material per gallon and product 2 re,uires 2 pounds of the raw material per gallon. 9ince )hoto &hemicals> ob5ective is to 'eep its production costs at the minimum possible level1 the firm>s management is loo'ing for a minimum(cost production plan that uses all the #0 pounds of perishable raw material and provides at least 0 gallons of product 1 and at least 20 gallons of product 2. -hat is the minimum(cost solution. Sol!t on' 593 /0 C00 See E.cel sol!t on on webs te 5. A millionaire wants to invest *150 million by purchasing some or all of the following properties< a shopping center that costs *"0 million1 a professional bas'etball franchise that costs *50 million1 and a 20(story office building that costs *100 million. The annual return on the shopping center is *10 million1 from the bas'etball franchise is *! million1 and from the office building is * 12 million. The investor has hired a manager who wor's 50 hours per wee'. The time re,uired to oversee operations of the shopping center is 0 hours1 for the bas'etball franchise is 10 hrs1 and the office building is 20 hours. %ecause of potential problems due to traffic conditions at the shopping center and fan reaction to

the bas'etball team1 the investor wishes to invest in either the shopping center or the bas'etball franchise1 not both. -hat would be his optimal investment in the alternatives. Sol!t on' C4A m ll onB BasDetball +ranch se and O++ ce b! ld n# See E.cel sol!t on on webs te 6. A beer company has breweries in two cities and has distributors in si2 states. The monthly capacities in the breweries1 the monthly demand per state1 and shipping costs per barrel are shown in the table below.

Shipping cost per barrel Tamp St. Dema a Louis nd Tennessee 2.5 1.25 1600 Georgia 1.75 3.25 1800 North Carolina 3 2 1500 South Carolina 2.25 2.75 950 Kentucky 4 1 2000 irginia 3.75 3.25 1400 Capacity 3500 5000
/ow should the firm distribute its product at minimum total cost. Sol!t on' Total cost C4732/0B Sh p 4A99 4299 4099 609 /999 A09 See E.cel sol!t on on webs te

ProHect Mana#ement' 1. &onsider the following pro5ect Act v ty A % & $ I @ B / Immed ate Predecessor ( ( ( A1% % $1& I1& @1B Act v ty T mes Opt m st c Most Pess m st c L Dely 2 6 # 6 5 7 12 6 6 6 # 5 6 " ! # " # 12 1 )ost to crash?day 500 600 1000 250 100 50 700 !50

$raw the networ'1 specify the critical path1 figure out the I9 and J9 for each activity and their slac's. Aound numbers as necessary. Sol!t on' See E.cel sol!t on on webs te 2. -hat is the probability that the above pro5ect will be complete in 0 days or less. 0n 27 days or less.

Sol!t on' See E.cel sol!t on on webs te . -hat activities would you crash to reduce the duration of the above pro5ect by 2 days. Sol!t on' See E.cel sol!t on on webs te I!al ty Mana#ement' 1. @or the following process1 find the control limits. Sample 4 / 5 7 0 A > 2 6 49 4 5.02 5.01 !."" 5.0 !."5 !."7 5.05 5.0" 5.1! 5.01 / 5.02 5.0 5.00 !."1 !."2 5.06 5.01 5.10 5.10 !."# Observat ons 5 7 !."! !."" 5.07 !."5 !." !."2 5.01 !."# 5.0 5.05 5.06 !."6 5.10 !."6 5.00 !."" !."" 5.0# 5.0# 5.07 0 !."6 !."6 !."" !.#" 5.01 5.0 !."" 5.0# 5.0" !."" A !."0 !."6 !."" !." !."5 !.#7 5.00 5.02 !."! !.""

0s the process in control with respect to both mean and range in all periods. Sol!t on' See E.cel sol!t on on webs te 2. 0n controlling the number of defectives1 you ta'e samples of si3e 1001 and get the following number of defectives Sample 1 2 ! 5 6 7 # " 10 11 12 1 1! 15 16 17 1# 1" <De+ect ves 5 6 7 ! 6 # ! 5 # ! 5 6 6 7 5 5

20 6 $raw control limits for this process. 0s the process in control. Sol!t on' See E.cel sol!t on on webs te . 0n controlling defects in a particular process1 the count of defects were as shown below. Sample 1 2 ! 5 6 7 # " 10 11 12 1 1! 15 <De+ects 12 # 16 1! 10 11 " 1! 1 15 12 10 1! 17 15

0s the process in control. $raw control limits for this process Sol!t on' See E.cel sol!t on on webs te