1. LaserPed, Inc. is a retailer of bicycles

1. LaserPed, Inc. is a retailer of bicycles and scooters
located in Rockville, Maryland. LaserPed procures supplies of bicycles
manufactured by Bikes R Us, Inc. located in Chicago, IL via wholesaler,
Mobility, Inc of Baltimore, MD. Bikes R Us produces various models of mountain
bikes including the “Deluxe A” model (see Figure 1). Bikes R Us produces 10
different bike models and other products. These products are sold throughout
the U.S. and Canada. It has wholesalers in most major cities. BikesRUs’ annual
sales in 2013 was $ 500 million.

The following table gives LaserPed’s annual sales of “Deluxe
A” model for the past nine years (2005-2013). Due to the economic decline it is
assumed that sales of Deluxe A in 2014 will remain flat and comparable to 2009-
2013. Figure 2 shows the bike supply chain.

Sales data for Deluxe A:

Item

2005

2006

2007

2008

2009-2013

LaserPed Scooter

5,200

5,100

5,100

5,100

5,000 each year

Fig 1: Model Deluxe A
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Fig 2: Supply Chain

Manufacturer Wholesaler
Retailer
(Bikes R Us) (Mobility) (LaserPed)

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The factory (Bikes R Us) procures all the components and
parts from domestic suppliers. Usually the factory, wholesaler, and the retailer
work one shift per day and have 250 work days each year with uniform production
rate. The bikes are sold to retailers for $ 300.00 per unit and it costs the
company $ 200.00 to produce each unit including all labor and overhead.

Ordering cost at LaserPed is estimated to be $ 30 per order
and inventory carrying cost (includes space, capital cost) is estimated to be
about 25% per year.

As the Operations Manager of LaserPed, you have to find the
following:

How
many Deluxe A bikes should LaserPed order in 2014? [1 point}
What
should be the optimal lot size for each order (economic order quantity)
for this model?
How
much inventory of Deluxe A bikes will the company (LaserPed) carry in stock
on average if they order EOQ? How many orders should LaserPed place
annually
Find
annual (ordering+ inventory carrying) cost?
What
should be the reorder point if the lead time is 10 days?

2. A recent Business Analyst (GW BBA) hired to streamline supply
chain found that LaserPed’s daily demand for bikes actually follows an
approximate normal distribution with mean 20 units and standard deviation of 5
units. She negotiated a fixed lead time of 5 days with the wholesaler and
wanted to provide a service level of 99%. (z value for 99% is 2.36)
a) Given
the above information and data in Problem no. 1 above, would you change your
ordering pattern? Why?
b) What
would be the new reorder point?
c) What
would be the new average inventory?
d) What
would be the safety stock?
e) To improve inventory
performance, the Business Analyst at LaserPed decided to directly source bikes
from the manufacturer (BikesRUs) and link their demand with BikesRUs production
plans. BikesRUs can produce bikes at a rate of 400 per day, setup cost is $ 400
per setup, and annual inventory carrying cost is 25% of the cost of bike. The analyst was able to negotiate a lower cost
of $ 240 per bike in exchange for long term orders. What would be the economic
production quantity? [6 points] What would be the maximum inventory? [2 points]
What would be the production run time and total cycle time (time between two
successive production runs)?

The following table
contains information on the cost to run three jobs on four available
machines. Determine as assignment plan that will minimize costs. [12
points] What will be the minimum cost?

Job

Machine A

Machine B

Machine C

Machine D

1

12

16

14

10

2

9

8

13

7

3

15

12

9

11

Product X (finished
product) is made of two units of Y (sub-assembly) and three of Z
(sub-assembly). Y is made of one unit of A and two units of B. Z is made
of two units of A and four units of C. Lead time for assembling X is one
day; Y, two days; Z three days. Lead time for procuring A from vendor is
two days; B, one day; and C, three days.

a. Draw
the bill of materials.
b. If
100 units of X are needed on day 10, develop a planning schedule showing when
each item should be ordered and in what quantity.

5. National
Cranberry Cooperative (NCC) is an organization, formed and owned by growers of
cranberries to process and market berries. During the cranberry harvest season,
trucks bring wet berries from the fields to the processing plant during a
workday that runs from 6 AM to 6 PM. Employees work in two shifts—the first from
6 AM to 2 PM and the second from 2 PM to 10 PM. Employees who work more than 8
hours per day receive overtime payment of 50% more than the base rate.
Prevailing base wage rate is $ 10 per hour. On peak days, approximately 18,000
bbls (barrels) of berries are trucked per day. The table below shows the
arrival information of wet berries during a typical peak day.

Time

Berries
Arrived (in bbls)

6
AM-7 AM

800

7
AM-8 AM

800

8
AM-9 AM

1,100

9
AM-10 AM

1,900

10
AM-11 AM

2,100

11
AM-12 PM

2,500

12
PM-1 PM

1,000

1
PM-2 PM

2,000

2
PM-3 PM

1,400

3
PM-4 PM

1,300

4
PM-5 PM

1,000

5
PM-6 PM

1,000

Trucks carry 100 bbls on average. Trucks dump their contents
in 12 holding bins. Each holding bin has a storage capacity of 250 bbls. When
the bins are full, incoming trucks must wait until it has sufficient available
space. A conveyor moves berries from the bin to the processing plant. The plant
starts its operation as soon as berries arrive. The first process in processing
plant after dumping is dechaffing. NCC has three dechaffing machines. Each
dechaffing machine can process 1,000 bbls per hour. The second process is
drying. NCC has one dryer with 750 bbls/hr of processing capacity. The final
process is packing and they have three packing machines. Total processing
capacity of the three different packing machines is 3,000 bbls per hour (i.e.
each packing machine can process 1,000 bbls per hour).

Draw a
process flow diagram and find the process bottleneck.
Find
when does truck queuing start?
How
many hours of overtime work are necessary?
How
would you streamline the process to avoid the truck queuing? At what cost?
A dryer costs $75,000, a dechaffing machine $ 30,000, a packing machine $
5,000 and a holding bin costs $5,000. Show at least two possible
alternatives and recommend one.

6.Identify
and briefly explain five principal strategies that stand out (differentiate) Aravind
Eye Health Care Operations.