Module Title

Supply Chain Planning & Control

Module Code

PLAN H5R01

Assignment Number

2

Assignment Type

Take home assignment

Weighting

20%

Submission date

Saturday 31st March

Feedback date

Feedback can be expected from lecturer 4 weeks after above submission date

All script assignments must be submitted via TurnItin through blackboard & also to your lecturer on night indicated above – please ensure that they are signed in.

LLL extension policy applies as outlined in the student handbook. Extensions will only be granted under exceptional circumstances and by those indicted below:

Assignments submitted late (without extension granted) will be corrected but this mark will not be included for grading purposes.

Uploading your assignment to Turnitin is a declaration that the work submitted is your own work that has been appropriately referenced according to the Harvard convention where applicable.

Question 1 (20 marks)

(Part A)

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:

Month

Apex

Arch

January

650

3,048

February

676

2,899

March

624

3,198

April

624

2,671

May

696

2,919

June

475

3,102

July

566

2,964

August

819

2,409

September

754

3,381

October

982

3,965

  1. 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)

  1. Repeat the calculations for part a) except this time base your calculations on a chase production plan. (4 marks)

  1. If hiring and firing costs increase dramatically which production would you favour and why? (5 marks)

(Part b)

You are given the following information:

Month

Forecasted

Sales

Regular

Production

Overtime

Production

Ending

Inventory

January

800 pieces

1,150 pieces

0 pieces

350 pieces

February

1,000

1,150

0

500

March

1,200

1,150

0

450

April

1,400

1,150

0

200

May

1,600

1,150

150

0

June

1,500

1,150

350

0

  • 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.

  1. Develop a monthly cash flow analysis for the above showing both net cash flow and cumulative net cash flow for each month. (3 marks)

  1. 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

1

7%

20

2

5%

30

3

4%

35

4

8%

18

5

10%

15

6

6%

22

7

11%

15

8

9%

20

9

5%

27

10

12%

10

  1. Develop a regression forecast model using the interest rate as the independent variable. (5 marks)

  1. Is this a time series or causal model? Explain your answer. (5 marks)

  1. How many loans would the credit union expect to make if the interest rate is 10%? 6.5%? (3 marks)

  1. Are the results for part c as you would expect? Please explain your answer. (3 marks)

  1. 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

Unit cost

€350

Order cost

€2

Annual unit holding cost

€48

Service level

99% (z = 2.33)

  1. What is the EOQ for the laptop? (3 marks)

  1. 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)

  1. 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)

  1. What is the reorder point for the laptop and how much of this consists of safety stock? (3 marks)

  1. 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)

  1. 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)

  1. 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

Planned Production

4

3

Component Reference
End Product

X

Y

Z

1

1

1

0

2

1

0

1

Using mixed model scheduling, determine a production schedule

(14 marks).

  1. 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

(3 marks).

  1. How can inventory mask problems in production and what are the risks associated with holding inventory? (3 marks).

Question 5 (20 marks)

  1. Briefly describe what you understand the term JIT to mean. What are the goals of JIT? (5 marks).

  2. 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).

Data Category

B

C

D

E

F

Lot Sizing Rule

L4L

FOQ = 700

FOQ = 700

L4L

L4L

Lead Time

3 weeks

3 weeks

4 weeks

2 weeks

1 week

Safety Stock

0

0

0

50

0

Scheduled Receipts

150 (week 2)

450 (week 2)

700 (week 1)

None

1,400 (week 1)

Beginning Inventory

125

0

235

750

0

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