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Chapter 3: 14-12OQ (page 369)
A bottling plant fills 2,400 bottles every two hours. The lead time is 40 minutes and a container accommodates 120 bottles. The safety stock is 10 percent of expected demand. How many kanban cards are needed?
In this situation, Karban card sets are required.
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How do facility location decisions differ for service facilities and manufacturing plants?
The chapter presents multiple techniques that service firms can use to make their processes leaner. Which technique is demonstrated by a restaurant that offers special discounts midweek to attract more demand during a traditionally slow period?
Question: Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,000 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process for which you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected:
Requirements (annual forecast) | 12,000 units |
Weigh per engine | 22 pounds |
Order processing cost | \(125 per order |
Inventory carry cost | 20 percent of the average value of inventory per year |
Order quantity | Supplier 1 Unit Price | Supplier 2 Unit Price |
1 to 1499 units/ order | \)510.00 | \(505.00 |
1500 to 2999 units/order | 500.00 | \)505.00 |
3000 + units/order | 490.00 | 488.00 |
Tooling costs | \(22.000 | \)20.000 |
Distances | 125 miles | 100 miles |
Note: Assume that half of the lot size is in inventory on average (1,000/2 =500 units).
Two qualified suppliers have submitted the following quotations:
Order quantity | Supplier 1 Unit Price | Supplier 2 Unit Price |
1 to 1499 units/ order | \(510.00 | \)505.00 |
1500 to 2999 units/order | 500.00 | \(505.00 |
3000 + units/order | 490.00 | 488.00 |
Tooling costs | \)22.000 | \(20.000 |
Distances | 125 miles | 100 miles |
Your assistant has obtained the following freight rates from your carrier:
Truckload (40,00 lbs. Each load): | \)0.80 per ton-mile |
Less-than-truckload | $1.20 per ton-mile |
Note: Per ton-mile 5 2,000 lbs. per mile.
a. Perform a total cost of ownership analysis and select a supplier.
b. Would it make economic sense to order in truckload quantities? Would your supplier selection change if you ordered truckload quantities?
Question:Santa Cruz Bottling is a manufacturer of organic soft drinks on the coast of central California. Its products are enjoying a growing reputation and increased demand throughout the American Southwest. Because of the high cost of transporting soft drinks, it is considering a new plant to serve the states of New Mexico and Arizona. A key concern in its search for a new location is the resultant transportation costs to serve its key markets. Following is a list of cities where its main wholesale customers are located, along with estimated annual demand in cases of product for each.
City | x-coordinate | y-coordinate | No. of cases |
Phoenix | 250 | 250 | 25,000 |
Tucson | 350 | 125 | 20,000 |
Albuquerque | 800 | 450 | 28,000 |
Santa Fe | 850 | 520 | 17,000 |
a. Use the centroid method to recommend a location for the new bottling plant. Round your coordinates to one decimal place.
b. Do you have any concerns about the result? How would you deal with them?
Transmissions are delivered to the fabrication line four at a time. It takes one hour for transmissions to be delivered. Approximately four vehicles are produced each hour, and management has decided that 50 percent of expected demand should be maintained as safety stock. How many kanban card sets are needed?
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