Sam s Cat Hotel Operates 52 Weeks Per Year 6 Days Per Week and Uses a Continuous
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Written Assignment Submit your solutions to the following problems. Write your solutions clearly and neatly. Problem 1 Sam's Cat Hotel operates 52 weeks per year and uses a continuous review inventory system. It purchases kitty litter for $10.75 per bag. The following information is available about these bags. - Demand = 85 bags/week - Order cost = $57/order - Annual holding cost = 26% of cost per bag - Desired cycle-service level = 90% - Lead-time = 2 weeks - Standard deviation of weekly demand = 18 bags a) What is the economic order quantity (EOQ) for kitty litter? b) What would be the average time between orders (in weeks)? c) What should the reorder point R be? d) Assume that the firm decides to change to the periodic review system to control the inventory for kitty litter. The time between reviews, P, is the average time between orders as calculated in part b. What should be the target inventory level T? e) For the most recent review, an inventory clerk checked the inventory of kitty litter and found 310 bags. There were no open orders or backorders at the time. Determine how many units should the firm order for the periodic review system. 1 Problem 2 Currently a company that designs Web sites has five customers in its backlog. The time since the order arrived, processing time, and promised due dates are given in the following table. Job Time Since Order Arrived (days ago) Processing Time (days) Due Date (days from now) A 6 18 66 B 3 24 58 C 2 32 80 D 10 22 26 E 8 12 50 a) Create a schedule using the first-come first-serve (FCFS) rule, calculating the average flow time and average days past due. b) Create a schedule using the earliest due date (EDD) rule, calculating the average flow time and average days past due. c) Comment on the performance of the FCFS and EDD rules relative to average flow time and average days past due. Problem 3 The MCD Credit Union advertises their ability to quickly process personal loan applications for their members. The following table shows the four steps required for the loan process that takes approximately eight working days to complete. Personal Loan Approval Process Lead Time in Days Level 1: Final Approval 1 Level 2: Loan Processing 3 Level 3: Pre-Approval 2 Level 4: Initial Application Screen 2 Total 8 To process a loan, the Credit Union requires accounting clerks, financial analysts and a branch manager. The table below provides the time required by each employee classification by process level. 2 Personal Loan Approval Process Resources Required Hours Per Day Accounting Clerk Financial Analyst Branch Manager Level 1: Final Approval 1.5 1.0 0.0 Level 2: Loan Processing 0.5 2.5 0.0 Level 3: Pre-Approval 1.0 0.5 0.5 Level 4: Initial Application Screen 0.5 0.2 2.0 Calculate the total hours of each resource that will be required by MCD if the following numbers of loan approvals are forecasted by the Credit Union for each working day over the next 12 days. Day of the Month 1 2 3 4 5 6 7 8 9 10 11 12 Final Loan Approval Applications 7 6 4 10 4 5 5 5 4 3 3 2 3
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