MBADM 822, Lesson 8: Homework Assignment (Team)

Assignment Overview

As a team, complete the following tasks:

• Review the assigned questions.
• Determine how your team will approach the assignment. Remember that both team members should make equal contributions towards completing the assignment; however, “equal” is defined by each team.
• Develop a response for all of the questions. Note: For problem-based questions, please use Excel as the preferred electronic format for files.
• Submit assignment by the due date. Late submissions are penalized.

This assignment will be graded in three parts. The rubric provided will be used to grade the case analysis portion of the assignment.  There is no rubric for the discussion or the problems, although all discussion posts need to be substantive and the problems should be solved using Excel.  If you have questions or need clarification, please contact me.

Questions

Respond to each of following questions or critical thinking prompts:

1. A grocery store uses a fixed order cycle policy for ordering the paper towels it sells to their customers. Demand for the paper towels is normally distributed with a mean of 50 rolls per day and a daily standard deviation of three rolls. The order interval is 12 days with a lead time of three days. The quantity of paper towel rolls in stock at the time of reorder for three order cycles is given in Table 9.2. (17 points)

Determine the order quantity for each of the three order cycles. Assume that the service level is 95%.

2. A manager of a college bookstore, Emily Ford purchases polo shirts from a local vendor with the college name and logo printed on them. Emily purchases these polo shirts from the vendor at a cost of US $20 per shirt. The bookstore incurs an ordering cost of US $80 per order, and the annual holding cost is 20% of the purchase cost of a shirt. Emily estimates that the demand for the polo shirts for the upcoming year will be 2,000 shirts. The vendor is willing to offer quantity discounts to the bookstore according to the schedule in Table 9.3. (18 points)

Given this quantity discount schedule, what is the optimal quantity of polo shirts that Emily should order, and what would be the total annual cost at this optimal order quantity?

3. A creamery shop sells a special blend of mango and vanilla ice cream. The cost to the shop of making this ice cream is US $3.00 per quart and it sells it for US $4.50 per quart. The demand for this is normally distributed with a mean of 35 quarts per day and a daily standard deviation of 4 quarts. At the end of each business day, any unsold ice cream is purchased by local restaurants for US $1.50 per quart. (10 points)
   • Determine the service level.
   • What is the optimum stocking level for this service level?