Higher Diploma in Business in Supply Chain Management CW_BRSCM_H_Y5
Supply Chain Planning & Control
Take home assignment
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Question 1 (20 marks)
XYZ Ltd. makes two types of garden sheds: the Apex and the Arch. These are made in the same factory and use the same labour and equipment. The following information is available from their cost accountant:
- Each shed costs €300 to produce requiring an average of 3.2 hours labour;
- Each employee works 160 hours/month and there is no ceiling on the number of employees;
- The cost of hiring/firing an employee is €300;
- The monthly holding cost of inventory is €15/unit;
- At the end of December there were zero sheds in stock and twenty employees.
The Sales people give you the following forecast:
- Develop a level production plan for XYZ Ltd. for the 10-month planning period. Calculate the total production, hiring, layoff, and inventory costs for your plan. (3 marks)
- Repeat the calculations for part a) except this time base your calculations on a chase production plan. (4 marks)
- If hiring and firing costs increase dramatically which production would you favour and why? (5 marks)
You are given the following information:
|January||800 pieces||1,150 pieces||0 pieces||350 pieces|
- Each piece sells for €500.
- Regular production costs are €350/unit, overtime production costs are €450/unit.
- The cost of holding inventory is €10/unit per month.
- Develop a monthly cash flow analysis for the above showing both net cash flow and cumulative net cash flow for each month. (3 marks)
- Why do the cash flow for April and May look healthier than the other months? What does this tell us about holding inventory in a level production plan? (5 marks)
Question 2 (20 marks)
The following is data received from a credit union detailing loans approved and the interest rate applied to these loans.
|Month||Interest Rate||Number of Loans|
- Develop a regression forecast model using the interest rate as the independent variable. (5 marks)
- Is this a time series or causal model? Explain your answer. (5 marks)
- How many loans would the credit union expect to make if the interest rate is 10%? 6.5%? (3 marks)
- Are the results for part c as you would expect? Please explain your answer. (3 marks)
- Calculate the coefficient of correlation and explain what we can determine from it. (4 marks)
Question 3 (20 marks)
SuperComputer is a computer store that sells various computer hardware and software. You have been given the following information regarding a certain laptop:
|Average weekly demand (52 weeks/year)||60|
|Standard deviation of weekly demand||12|
|Order lead time||3 weeks|
|Standard deviation of order lead time||0|
|Annual unit holding cost||€48|
|Service level||99% (z = 2.33)|
- What is the EOQ for the laptop? (3 marks)
- Calculate annual ordering and holding costs for the laptop (ignoring safety stock). What do you notice and how would this affect your stocking policy? (5 marks)
- If SuperComputer currently order 120 laptops at a time, how much more or less would SuperComputer pay in annual holding and ordering costs if they were to order just 12 laptops at a time? (3 marks)
- What is the reorder point for the laptop and how much of this consists of safety stock? (3 marks)
- What are the annual holding costs when considering safety stock? How much of this cost is due to the safety stock being held? (3 marks)
- If SuperComputer want to reduce their order lead time to one week what would be the new safety stock and how would this affect annual holding costs? (3 marks)
Question 4 (20 marks)
- Advanced Electronics produces two simple circuit boards on one of its assembly lines. The following data shows the board’s reference and their respective BOM.
|End Product||Board 1||Board 2|
Using mixed model scheduling, determine a production schedule
- A work centre can process 1,800 pieces hourly. It takes 45 minutes for this work centre to receive material from the previous process. A kanban system is in place with each container holding 90 units and a safety level of 10% is employed, Determine the number of kanbans that should be utilised
- How can inventory mask problems in production and what are the risks associated with holding inventory? (3 marks).
Question 5 (20 marks)
- Briefly describe what you understand the term JIT to mean. What are the goals of JIT? (5 marks).
- The Bill of Materials (BOM) for product A is shown below. The MPS for product A calls for 120 units to be started in each of weeks 2, 4, 5 and 8. Data from the inventory records are shown below. Develop the material requirements plan for the next eight weeks for each item using the templates provided (15 marks).
|Lot Sizing Rule||L4L||FOQ = 700||FOQ = 700||L4L||L4L|
|Lead Time||3 weeks||3 weeks||4 weeks||2 weeks||1 week|
|Scheduled Receipts||150 (week 2)||450 (week 2)||700 (week 1)||None||1,400 (week 1)|
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