Operations
Management II 73-431 Winter 2008
Odette School of Business
University of Windsor

Midterm Exam II

Instructions:

This
exam has 20 pages including this cover page, four bank pages and 8 pages of
tables.

Please
be sure to put your name and student ID number on each odd numbered page.

Show
your work.

State
results up to four decimal places.

Do
not return tables and formula sheet.

Grading:

Question Marks:

1
/10
2
/13
3
/16
4
/13
5
/13
Total: /65

Question 1: (10 points) Circle the most
appropriate answer

1.1(i) Functional products include the staples
that people buy in a wide range of retail outlets such as grocery stores and
gas stations. (ii) We should match functional products with a responsive supply
chain.
a.
(i)
true (ii) false
b.
(i)
false (ii) true
c.
Both
true
d.
Both
false

1.2(i) Supply chain includes suppliers and
their supplier, manufacturers and their manufacturers. (ii) The Supply-Chain
Management includes managing information, materials and services from
raw-materials suppliers through factories and warehouses to the end customer.
a.
(i)
true (ii) false
b.
(i)
false (ii) true
c.
Both
true
d.
Both
false

1.3Suppose that the locations of warehouse
= (0,0), customer 1 = (3,0) and customer 2 = (0,4). What is savings (1,2)?
a. 2 Correct choice
b. 3
c. 4
d. 5

1.4(i) Saving matrix method guarantees an
optimal solution. (ii) Nearest neighbor method guarantees an optimal solution.

(i) true (ii) false
(i) false (ii) true
Both true
Both false

1.5For which of the following a single
period model is the most appropriate?
a. pen
b. pencil
c. paper
d. computer

1.6Suppose that .gif”>and .gif”> If demand is Normally
distributed with mean .gif”>, the order size

.gif”> Correct choice
.gif”>
.gif”>
Non of the above

1.7Notation .gif”> used to denote the
expected number of units stock-out per
a. cycle or order
b. order or period
c. period or cycle
d. year

1.8Consider the iterative procedure used
to find an optimal .gif”> policy without
service. The iterative procedure stops when
a. .gif”>
b. .gif”>
c. Both
d. None

1.9Type 2 service is
a. the proportion of demand not met from
stock
b. the proportion of demand met from stock
c. the probability of no stockout
d. the probability of stockout?

1.10 Consider the procedure used to find an
optimal .gif”> policy with Type I
service. The optimal order size
a. .gif”>EOQ
b. .gif”>EOQ
c. .gif”>EOQ
d. None of the above

Question 2: (13 points)
A
large national producer of canned foods plans to purchase a combine that will
be customized for its needs. One of the parts used in the combine is a
replaceable blade for harvesting corn. Spare blades can be purchased at the
time the order is placed for $130 each, but will cost $530 each if purchased at
a later time because a special production run will be required. It is estimated
that the number of replacement blades required by the combine over its useful
lifetime can be closely approximated by a normal distribution with mean 20 and
standard deviation 5. The combine maker agrees to buy back unused blades for
$30 each. How many spare blades should the company purchase with the combine?
a. (2 points) Compute the underage cost
b. (2 points) Compute the overage cost
c. (6 points) How many spare blades should
the company purchase with the combine?
d. (3 points) How would you change your
answer to partc if the company purchases 4 combines?
How many spare blades should the company purchase with 4 combines?

Question 3: (16 points)
An
automotive warehouse stocks a variety of parts that are sold at neighborhood
stores. One particular part, a popular brand of oil filter, is purchased by the
warehouse for $3 each. It is estimated that the cost of order processing and
receipt is $25 per order. The company uses an inventory carrying charge based
on a 20 percent annual interest rate. The monthly demand for the filter follows
a normal distribution with mean 200 and standard deviation 25. Order lead time
is assumed to be four months. Assume that if a filter is demanded when the
warehouse is out of stock, then the demand is back-ordered, and the cost
assessed for each back-ordered demand is $1.00. Determine the average annual
cost of holding, setup, and stock-out associated with this item assuming .gif”>

a.
(4
points) Compute the average annual holding cost.

b.
(2 points) Compute the average annual setup
cost.

c.
(4
points) Compute the average annual stock-out cost.

d.
(4
points) Compute the probability(no stock-out)

e.
(2
points) Compute the fill rate (up to four decimal places).0pt;margin-right:0in;margin-bottom:
3.0pt;margin-left:0in;text-align:justify”>Question 4: (13 points)
Consider
Question 3 again. Find an Optimal .gif”> policy assuming no service
constraint.Question 5: (13 points)The manager at Albertsons, a grocery store
selling on-line, has 5 orders that are to be delivered to customers. The
location and order size for each customer are shown below:

X-coordinate

Y-coordinate

Order size

Warehouse

0

0

Customer 1

0

5

50

Customer 2

7

1

60

Customer 3

2

10

70

Customer 4

4

5

80

Customer 5

9

2

40

The Albertsons fulfillment store has two trucks, each
capable of carrying upto 220 units. Using the savings matrix and nearest
neighbor methods devise a suitable delivery schedule. If there is any route
that intersects itself, improve the route. State the route of each vehicle.
Operations
Management II 73-431 Winter 2008Odette School of BusinessUniversity of WindsorMidterm Exam II Instructions:
This
exam has 20 pages including this cover page, four bank pages and 8 pages of
tables.
Please
be sure to put your name and student ID number on each odd numbered page.
Show
your work.
State
results up to four decimal places.
Do
not return tables and formula sheet.Grading:Question Marks:1
/102
/133
/164
/135
/13Total: /65Question 1: (10 points) Circle the most
appropriate answer1.1(i) Functional products include the staples
that people buy in a wide range of retail outlets such as grocery stores and
gas stations. (ii) We should match functional products with a responsive supply
chain. a.
(i)
true (ii) falseb.
(i)
false (ii) truec.
Both
trued.
Both
false1.2(i) Supply chain includes suppliers and
their supplier, manufacturers and their manufacturers. (ii) The Supply-Chain
Management includes managing information, materials and services from
raw-materials suppliers through factories and warehouses to the end customer.a.
(i)
true (ii) falseb.
(i)
false (ii) truec.
Both
trued.
Both
false1.3Suppose that the locations of warehouse
= (0,0), customer 1 = (3,0) and customer 2 = (0,4). What is savings (1,2)?a. 2 Correct choiceb. 3c. 4d. 51.4(i) Saving matrix method guarantees an
optimal solution. (ii) Nearest neighbor method guarantees an optimal solution.1.5For which of the following a single
period model is the most appropriate?a. pen b. pencilc. paper d. computer 1.6Suppose that .gif”>and .gif”> If demand is Normally
distributed with mean .gif”>, the order size1.7Notation .gif”> used to denote the
expected number of units stock-out per a. cycle or orderb. order or periodc. period or cycled. year1.8Consider the iterative procedure used
to find an optimal .gif”> policy without
service. The iterative procedure stops when a. .gif”>b. .gif”>c. Bothd. None1.9Type 2 service is a. the proportion of demand not met from
stockb. the proportion of demand met from stockc. the probability of no stockoutd. the probability of stockout?1.10 Consider the procedure used to find an
optimal .gif”> policy with Type I
service. The optimal order size a. .gif”>EOQb. .gif”>EOQc. .gif”>EOQd. None of the aboveQuestion 2: (13 points)A
large national producer of canned foods plans to purchase a combine that will
be customized for its needs. One of the parts used in the combine is a
replaceable blade for harvesting corn. Spare blades can be purchased at the
time the order is placed for $130 each, but will cost $530 each if purchased at
a later time because a special production run will be required. It is estimated
that the number of replacement blades required by the combine over its useful
lifetime can be closely approximated by a normal distribution with mean 20 and
standard deviation 5. The combine maker agrees to buy back unused blades for
$30 each. How many spare blades should the company purchase with the combine? a. (2 points) Compute the underage cost b. (2 points) Compute the overage cost c. (6 points) How many spare blades should
the company purchase with the combine?d. (3 points) How would you change your
answer to partc if the company purchases 4 combines?
How many spare blades should the company purchase with 4 combines? Question 3: (16 points)An
automotive warehouse stocks a variety of parts that are sold at neighborhood
stores. One particular part, a popular brand of oil filter, is purchased by the
warehouse for $3 each. It is estimated that the cost of order processing and
receipt is $25 per order. The company uses an inventory carrying charge based
on a 20 percent annual interest rate. The monthly demand for the filter follows
a normal distribution with mean 200 and standard deviation 25. Order lead time
is assumed to be four months. Assume that if a filter is demanded when the
warehouse is out of stock, then the demand is back-ordered, and the cost
assessed for each back-ordered demand is $1.00. Determine the average annual
cost of holding, setup, and stock-out associated with this item assuming .gif”>a.
(4
points) Compute the average annual holding cost.b.
(2 points) Compute the average annual setup
cost.c.
(4
points) Compute the average annual stock-out cost.d.
(4
points) Compute the probability(no stock-out) e.
(2
points) Compute the fill rate (up to four decimal places)
Consider
Question 3 again. Find an Optimal .gif”> policy assuming no service
constraint.The manager at Albertsons, a grocery store
selling on-line, has 5 orders that are to be delivered to customers. The
location and order size for each customer are shown below:X-coordinateY-coordinateOrder sizeWarehouse00Customer 10550Customer 27160Customer 321070Customer 44580Customer 59240
The Albertsons fulfillment store has two trucks, each
capable of carrying upto 220 units. Using the savings matrix and nearest
neighbor methods devise a suitable delivery schedule. If there is any route
that intersects itself, improve the route. State the route of each vehicle.