Expert answer:supply chain
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homework_5.docx
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SCHM 2301
Homework 5
Print out a copy and bring it to class.
Name
Section
__________________________
__________________________
100 points.
1. (10 points) Draw a map of a supply chain, similar to that in homework 1 (it can be a different
product). Label where in the process raw materials, work in process (WIP), and finished goods
inventory reside. List examples of each type of inventory.
2. (25 points) You are the supply chain planner for a plant that manufactures bottled beverages
(bottles). Table 1 shows a forecast of demand for the next year from the sales department, and
you are required to create a production plan to meet that demand. Your plant can produce
anywhere between 35 and 45 million bottles per month, and bottles produced in a month can be
used to fulfill demand in that same month.
Table 1. Forecasted Demand.
Demand (millions of bottles)
January
February
March
April
May
30
33
35
36
45
July
August
September October
November
55
55
48
38
38
June
50
December
35
a. Fill in the table below with a feasible production plan. That is, decide how much to produce
in each month such that you 1) do not produce less than 35 million bottles per month, 2) do
not produce more than 45 million bottles per month, and 3) have enough bottles to meet the
sales forecast.
Production (millions of bottles)
January
February
March
July
August
September
April
May
June
October
November
December
b. Fill in the charts with the monthly demand, production, and inventory in storage.
Monthly Demand and Production
60
50
40
30
20
10
0
Inventory in Storage
40
35
30
25
20
15
10
5
0
c. In what months are you building inventory and in what months are you depleting
inventory?
d. If each individual bottle in inventory has a product value of $0.25 and the inventory holding
cost percentage is 12% per year, what is the total inventory holding cost of your plan? The
holding cost percentage is multiplied by the total value of inventory in possession to get a
total inventory holding cost.
e. Calculate the inventory turnover for your plan, assuming the COGS of each bottle is $0.25.
3. (25 points) A company experiences annual demand of 1,000 units for an item that it purchases.
The rate of demand per day is very stable, with very little variation from day to day. The item
costs $50 when purchased in quantities less than 100 and $48 for 100 items or more. Ordering
costs are $40 and the carrying cost is 25 percent. How much should the company buy each time
an order is placed?
4. (20 points) Rachel is making t-shirts that she hopes to sell at the upcoming “War on War”
concert. The t-shirts cost $6 each to produce, and she will price them at $20 each. She expects
that she can donate any unsold t-shirts to a local charity for a tax write-off of $2 each. Based on
her experience with past concerts, Rachel expects to sell 1,000 t-shirts with a standard deviation
of 100 t-shirts.
a. How many t-shirts should Rachel make?
b. What is the probability that she will run out of shirts to sell?
5. (20 points) Read “BCG-Metals-Manufacturing-inventory.”
Q1: What problems do excess inventory conceal?
Q2: List the four distinctive challenges of inventory management in the metals industry.
Q3: List the four rules for managing reducing inventories and summarize each in a sentence or two.
…
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