American Military University - BUSN312 Final Exam. Reviwed for 100% Score.

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a. Let x be the number of units started initially at Step 1. With a scrap rate of 10% in Step 1 the input to Step 2 is 0.9x. The input to Step 3 is (1 – 0.06) (1 – 0.10)x. With a scrap rate of 6%... at Step 3 the number of good units after Step 3 = (1 – 0.06) (1 – 0.06) (1 – 0.10)x = (0.94)2(0.90)x. The required output is 450 units (0.94)2(0.90)x = 450 units x = 565.87≈ 566 units b. (1 – 0.03)2(1 – 0.05)x = 450 units (0.97)2(0.95)x = 450 units x = 503.44≈ 504 units Savings of 566 – 504 = 62 units c. From (a) The scrap = 566 – 450 = 116 units @ $10 per unit, The Total Cost = $1,160.00 Harvey Industries Read the case and help the new president make inventory decisions for the company. Harvey Industries, a Wisconsin company, specializes in the assembly of high-pressure washer systems and in the sale of repair parts for these systems. The products range from small portable high-pressure washers to large industrial installations for snow removal from vehicles stored outdoors during the winter months. Typical uses for high-pressure water cleaning include: Airplanes, Automobiles, Barns, Building maintenance, Engines, Ice cream plants, Lift trucks, Machinery, and Swimming pools. Industrial customers include General Motors, Ford, Chrysler, Delta Airlines, United Parcel Service, and Shell Oil Company. Although the industrial applications are a significant part of its sales, Harvey Industries is primarily an assembler of equipment for coin operated self-service car wash systems. The typical car wash is of concrete block construction with an equipment room in the center, flanked on either side by a number of bays. The cars are driven into the bays where the owner can wash and wax the car, utilizing high-pressure hot water and liquid wax. A dollar bill changer is available to provide change for the use of the equipment and the purchase of various products from dispensers. The products include towels, tire cleaner, and upholstery cleaner. In recent years, Harvey Industries has been in financial difficulty. The company has lost money for three of the last four years, with the last year’s loss being $17,174 on sales of $1,238,674. Inventory levels have been steadily increasing to their present levels of $124,324. The company employs 23 people with the management team consisting of the following key employees: president, sales manager, manufacturing manager, controller, and purchasing manager. In addition, the assembly foreman, stockroom foreman and quality engineer report to the manufacturing manager. Current Inventory Control System The current inventory control “system” consists of orders for stock replenishment being made by the stockroom foreman, the purchasing manager, or the manufacturing manager whenever one of them notices that the inventory is low. An order for replenishment of inventory is also placed whenever someone (either a customer or an employee in the assembly area) wants an item and it is not in stock. Some inventory is needed for the assembly of the high-pressure equipment for the car wash and industrial applications. There are current and accurate bills of material for these assemblies. The material needs to support the assembly schedule are generally known well in advance of the build schedule. The majority of inventory transactions are for repair parts and for supplies used by the car washes, such as paper towels, detergent, and wax concentrate. Because of the constant and rugged use of the car wash equipment, there is a steady demand for the various repair parts. The stockroom is well organized, with parts stored in locations according to each vendor. The number of vendors is relatively limited, with each vendor generally supplying many different parts. For example, the repair parts from Allen Bradley, a manufacturer of electrical motors, are stocked in the same location. These repair parts will be used to provide service for the many electrical motors that are part of the high-pressure pump and motor assembly used by all of the car washes. Because of the heavy sales volume of repair parts, there are generally two employees working in the stockroom—a stockroom foreman who reports to the manufacturing manager and an assistant to the foreman. One of these two employees will handle customer orders. Many customers stop by and order the parts and supplies they need. Telephone orders are also received and are shipped by United Parcel Service the same day. The assembly area has some inventory stored on the shop floor. This inventory consists of low-value items that are used every day, such as nuts, bolts, screws, and washers. These purchased items do not amount to very much dollar volume throughout the year. Unfortunately, oftentimes the assembly area is out of one of these basic items and this causes a significant amount of downtime for the assembly lines. Paperwork is kept to a minimum. A sales slip listing the part numbers and quantities sold to a customer is generally made out for each sale. If the assembly department needs items that are not stocked on the assembly floor, someone from that department will enter the stockroom and withdraw the necessary material. There is no paperwork made out for the items needed on the assembly floor. There were 973 different part numbers purchased for stock last year and those purchases amounted to $314,673. An analysis of inventory records shows that $220,684 was spent on just 179 of the part numbers. Fortunately for Harvey Industries, most of the items they purchase are stocked by either the manufacturer or by a wholesaler. When it is discovered that the company is out of stock on an item, it generally takes only two or three days to replenish the stock. Due to the company’s recent losses, its auditing firm became concerned about the company’s ability to continue in business. Recently the company sold off excess vacant land adjoining its manufacturing facility to generate cash to meet its financial obligations. New president Because of the recent death of the owner, the trust department of a Milwaukee bank (as trustee for the state) has taken over the company’s affairs and has appointed a new company president. The new president has identified many problem areas—one of which is improper inventory control. He has retained you as a consultant to make specific recommendations concerning a revised inventory control system. What are your recommendations and their rationale? Concept Check – all the answers below were WAGs According to APICS, what should the record accuracy be for A items? 1% | 0.2% | 5% | 2% | 10% From the EOQ, we order 300 items at a time. Holding cost is $3 per unit. What is our annual carrying cost? $450 | $150 | $900 | $300 | $3 | $25 From the EOQ, we order 50 units at a time. Order setup cost is $25, and total annual demand is 1,000 units. What is the annual order cost? $25 | $2,500 | $1,250 | $500 | $1,000 From the EOQ, Q is 100, and annual demand is 500. What is the length of the order cycle? 47 days | 365 days | 100 days | 121 days | 73 days Daily usage is 5, and lead time to replenish is 12 days. What is the ROP? 0 | 5 | 60 | 12 | 2 A manager wants no more than 5% risk of stockout. What value of z is appropriate? -1.68 | 1.65 | 2.28 | 1.88 | .92 What is the meaning of Halloween by BuyCostumes.com? Biggest business opportunity of the year and a major operational challenge How fast is BuyCostumes.com growing? 75% annual growth The challenge of rapid growth is further complicated by which factor? Over 50% of the annual sales occur in 6 weeks When does planning for the Halloween season begin? January When does purchasing begin to order the Halloween inventory? After making projections at the item level How is costume buying different from traditional buying? Buying is 5-6 months in the future How does the warehouse use projected sales volume? To determine peak season staffing needs How does customer service use projected sales volume? To estimate how many phone calls they will receive When is the product placed in the warehouse? After the product is unloaded, inspected, counted and received into the inventory system Where does the warehouse locate their fast moving products? Near conveyors How many orders per week are taken during the Halloween season? 30,000/week How is the shipping method selected? By the customer Wen is a customer NOT permitted to place an order? For an out of stock item How are out of stocks prevented? By ordering inventory throughout the Halloween season Which of the following only occurs during the peak Halloween season? The BuyCustomers.com team is working around the clock to solve customer problems What does a company depend on to stay competitive? Its ability to develop new products Why is new product development considered to be a project? It is a well defined and calculated process that needs to be managed What does successful project management require? Careful control and monitoring of all critical resources Which of the following statements best describes the skills of the project manager? Plans for the interaction of the critical resources to meet the demands and constraints of a particular project How does a Six Flags project begin? With a Statement of Work (SOW) What will always be contained in the Statement of Work (SOW)? Project milestones, key completion events, and budget parameters What is a task? An element of a project that is no longer than several months and performed by one group or organization What is the group of activities or tasks assigned to a single organizational unit with specific goals or milestones called? Work Breakdown Structure (WBS) What defines the hierarch of tasks, sub tasks and work packages and breaks the work down into manageable pieces? Work Breakdown Structure (WBS) What do control charts enable the project manager to do? See deadlines, workflow and the interconnection of assigned tasks What information is included in a Gantt Chart? List of tasks, their start date and how long they will take What is the critical path? Longest path What happens when activities on the critical path are delayed? The entire project can be delayed What is a critical issue for all project managers? Flexibility 15. Concept Check – Missing  sorry [Show More]

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