Problems Operations and Process Management

Problems Week 4 Betsy Whitfield
ITT Tech Online
MG518 – Operations and Process Management
Professor Eloise Thomas
August 24, 2013

* Chapter 9: Problems 2a, 2b, 5a, and 5b on page 346 * Chapter 10: Problems 2 and 5 on pages 381-382 * Chapter 11: Problems 2 and 3 on pages 407-408 * Chapter 12: Problems 2, 3a, 3b, 10a, 10b, 22a, and 22b on pages 440-443
Chapter 9

Problem 2
Prince Electronics, a manufacturer of consumer electronic goods, has five distribution centers in different regions of the country. For one of its products, a high-speed modem priced at $350 per unit, the average weekly demand at each distribution center is 75 units. Average shipment size to each distribution center is 400 units, and average lead time for delivery is 2 weeks. Each distribution center carries 2 weeks’ supply as safety stock but holds no anticipation inventory.

a. On average, how many dollars of pipeline inventory will be in transit to each distribution center?

Distribution center =(75)(2)($350)=$52,500

b. How much total inventory (cycle, safety, and pipeline) does Prince hold for all five distribution centers?

Total Inventory=5[(400/2)+(2x75)+(2x75)]
=5(500)
=2,500 units

Problem 5
Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows the following inventory investment by category: raw materials, $3,129,500; work-in-process, $6,237,000; and finished goods, $2,686,500. This year’s cost of goods sold will be about $32.5 million. Assuming 52 business weeks per year, express total inventory as

Weeks of supply

Raw materials + work in process + finished goods

= $3,129,500 + $6,237,000 + $2,686,500
= $12,053,000

Sales per week
=$32,500,000/52
=$625,000

Weekly sales
=$12,053,000/$625,000
=19.28 weeks

b. Inventory turns

=$32,500,000/$12,053,000
=2.6964 turn over

Chapter 10

Problem 2