Exercise 2

Support Facility, Managing Facilitating Goods

Date of Submission: 21 August 2021

Refer pdf file “Exercise Fitzsimmons.pdf”. Solve the exercise mentioned against your
name:

Exercise Exercise
Support Managing
Sr. Facility Facilitating
No. PRN Name Goods
1 19020348002 Ajinkya Yadav 9.2 13.1, 13.7
2 19020348004 Annie Jacob 9.3 13.2, 13.8
3 19020348018 Neetu Upadhyay 9.4 13.3, 13.9
9.2
Getting a physical examination at a physician’s office involves a series of steps.
The table below lists these activities and their average times. The activities can occur in
any order, but the doctor’s consultation must be the last. Three nurses are assigned to
perform activities 1, 2, & 4

Activity Average Time, Min

1. Blood Pressure, Wt, Temp 6
2. Medical History 20
3. Doctor's Checkup 18

a) What are the bottleneck activity and the maximum number of patients who can
be seen per hour?
b) Suggest a reallocation of nursing and/or doctor activities that would result in
increased service capacity and draw a product flow diagram. What is the
capacity of your improved system?

Solution:
Ans a) Medical History is the bottle neck activity and Maximum 3 Patients can be
served per hour.

Ans b) Completed in Microsoft PowerPoint (Attached along with the Microsoft Word
Assignment)
13.1
Annual demand for the notebook binders that ted’s Stationery Shop sells is 10,000
units. Ted operates his business on a 200-workday year. The unit cost of a binder is $2,
and the cost of placing an order with his supplier is $0.40. The cost of carrying a binder
in stock is 10 percent of its value.
a) What should the EOQ be?
b) How many orders are placed per year?
c) How many working days elapse between reorders?
Solution:
D (Annual Demand) = 10,000
Cp (Ordering Costs) = $0.40
Cu (Unit Costs) = $ 2
I = 10% Cu
Cu X I (Inventory Carrying Cost) = 10% of Unit Cost = $0.2
EOQ = Sqrt (2*D*Cp/(CuXI) = Sqrt {(2*10000*.4)/(.2)} = 200
Ans a) EOQ = 200 Nos.
No. of Orders placed every year = D/EOQ = 10000/200 = 50
Ans b) Nos. Orders Every Year = 50 Orders.
Working Days between Reorders = No. Of. Working Days/No. Of Orders = 200/50 = 4
Ans c) No. Of Working Days Between Reorders = 4 Days.
13.7
Monthly demand for an inventory item is a normally distributed random variable with a
mean of 20 units and a variance of 4. Demand follows this distribution every month, 12
months a year. When inventory reaches a predetermined level, an order for
replenishment is placed. The fixed ordering cost is $60 per order. The items cost $4 per
unit and the annual inventory holding cost is 25 percent of the average value of the
inventory. The replenishment lead time is exactly 4 months.
a) Determine the EOQ
b) Assume 10 percent “all units” discount will be given if the order quantity is greater
than or equal to 100 units. What order quantity would you recommend with this
offer?
c) Determine the necessary reorder point and safety stock to achieve a 90% service
level.
Solution:
Ans a)
D (Annual Demand) = 240 (20X12)
Cp (Ordering Costs) = $60
Cu (Unit Costs) = $4
Cu X 1 (Inventory Carrying Cost) = 25% of Unit Cost = $1
EOQ = Sqrt (2*D*Cp/Cu) = Sqrt {(2*240*60)/(1)} = 169.70 ≅ 170
Ans b)
Total Cost = Ordering Cost + Inventory Carrying Cost + Product Cost
Total Cost (@ EOQ =170) = ((240/170)*60) + (0.5*170)*1 + (240*4) = 1130
Total Cost (10% Discount OQ 100) = ((240/100)*60) + (0.5*100)*0.9 + (240*3.6) = 1053
Since 170 > 100 (Discount of 10%)
EOQ = Sqrt {(2*240*60)/(.9)} = 178.88 ≅ 179
Total Cost (10% Discount OQ 100) = ((240/179)*60) + (0.5*179)*0.9 + (240*3.6) = 1024
Ans c)
Safety Stock = Z X Std.Dev of Demand X Sqrt Of Lead Time
Z value for 90% Confidence Level = 1.645
Safety Stock = 1.645 X 2 X √(4) = 6.58