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ec-1. Bell Computer Company,2. VanOyen Manufacturing and 3. Davis Instruments




Question;1.;Bell Computer Company;Bell computers purchases IC chips;from a supplier at $350/chip. The holding cost has been estimated to be 10% of;purchase price. It has estimated that Bell will need 4800 chips per year. Bell operates;250 day per year. The company wants to maintain a service level of 95%. The;cost placing an order is $120/order. Based on past Bell has estimated that;demand during the 10 day lead time is normally distributed with a mean of 192;and a standard deviation of 10.;Given the cost of acquiring the chip;an executive group has been studying the option of manufacturing the IC chip in;house. Given the resources available they can build a facility with a production;capacity of 30 units per day. The demand during the 15 day lead time demand is;approximately normally distributed, with a mean of 288 units and a standard;deviation of 20 units. Production costs;are expected to be $325 per part. Setup cost for a manufacturing run is assessed;at $600/setup.;For option one calculate the following;a) What is the Economic order;quantity?;b) What is the safety stock?;c) What is the reorder point?;d) What is the total cost;including cost of purchasing the parts.;For option two calculate the;following;e) What is the Economic;production quantity?;f) What is the safety stock?;g) What is the reorder point?;h) What is the total cost;including cost of manufacturing the parts.;Which option should they choose?;2.;VanOyen Manufacturing;M.;P. VanOyen Manufacturing has gone out on bid for a regulator component.;Expected demand is 8400 units per year. The item can be purchased from either;Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the;table. Ordering cost is $ 50, and annual holding cost per unit is estimated to;be 30% of purchase price. Vendor 1?s base price is $16 and Vendor 2?s base;price is $16.10.;a) What is the Economic order;quantity for each supplier?;b) What quantity should be;order and which supplier should be used?;c) What is the total cost?;d) How many orders will be;placed in a year?;Vendor 1;Vendor 2;Quantity;Discount;Quantity;Discount;1-499;0%;1-399;0%;500-999;3.00%;400-799;3.00%;1000+;6%;800+;6%;3.;Davis;Instruments;Davis Instruments has two manufacturing;plants located in Atlanta, Georgia.;Product demand varies considerably from month to month, causing Davis;extreme difficulty in workforce scheduling.;Recently Davis started hiring temporary workers supplied by workforce;unlimited, a company that specializes in providing temporary employees for;firms in the greater Atlanta area.;WorkForce Unlimited offered to provide temporary employees under three;contract options that differ in terms of the length of employment and the;cost. The three options are summarized;Option;Length of Employment;Cost;1;One month;$2,000;2;Two months;$4,800;3;Three;$7,500;The longer contract periods are more;expensive because WorkForce Unlimited experiences greater difficulty finding;temporary workers who are willing to commit to longer work assignments.Over the;next six months, David projects the following needs for additional employees;Month;January;February;March;April;May;June;Employees Needed;10;23;19;26;20;14;Each month, Davis can hire as many;temporary employees as needed under each of the three options. For instance, if Davis hires five employees;in January under Option2, WorkForce Unlimited will supply Davis with five;temporary workers who will work two months: January and February. For these workers, Davis will have to pay 5;($4800) = $24,000. Because of some merger negotiations under way, Davis does;not want to commit to any contractual obligations for temporary employees that;extend beyond June.;Davis?s;quality control program requires each temporary employee to receive training at;the time of hire. The training program;is required even if the person worked for Davis Instruments in the past. Davis estimates that the cost of training is;$875 each time a temporary employee is hired.;Thus, if a temporary employee is hired for one month. Davis will incur a training cost of $875,but;will incur no additional training cost if the employee is on a two-or;three-month contract.;Managerial;Report;Develop a model that can be used to;determine the number of temporary employees Davis should hire each month under;each contract plan in order to meet the projected needs at a minimum total cost. Include the following items in your report;a) A;schedule that shows the number of temporary employees that Davis should hire;each month for each contract option.;b) If;the cost to train each temporary employee could be reduce to $700 per month;what effect would this change have on the hiring plan? Explain. Discuss the implications that this;effect on the hiring plan has for identifying methods for reducing training;costs. How much of a reduction in;training costs would be required to change the hiring plan based on a training;cost of $875 per temporary employee?


Paper#55461 | Written in 18-Jul-2015

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