MGT 3900 Final 2023 - Questions and Answers According to our book, Lead time demand (LTD) is best defined as: a. the total flow-unit requirement during th... [Show More] e replenishment lead time b. the uncertainty in the flow-rate due to problems in forecasting and supply variance c. the total annual flow-unit requirement d. answering the fundamental question of when to reorder inventory. According to our book, cycle service level is best defined as: a. the fraction of total demand satisfied from inventory on hand b. the probability that there will be no stockout within an order cycle, where an order cycle is the time between two consecutive replenishment orders c. the fraction of true demand that is satisfied without stockouts d. the fraction of true demand that is satisfied from safety stock According to our book, marginal analysis is: a. the analysis of the difference between the unit marginal cost of procurements and its salvage value. b. the analysis of the difference between the unit price of the product and the unit marginal cost of procurement of the product. c. the analysis of how the purchase of an additional or incremental unit will affect the margin of the holding costs in the warehouse due to added inventory. d. the comparison of expected costs and benefits of purchasing each incremental or additional unit. After their analysis of purchasing using the Newsvendor Model under conditions of uncertainty, the authors summarize the lessons learned as: a. the optimal service level increases with the net marginal benefit and decreases with the net marginal cost. b. the optimal service level increases with the increase in uncertainty. c. the optimal service level increases with the net marginal cost. d. the optimal service decreases with increased uncertainty. George's bean store stocks every type of bean grown in the world. George's is proud of their wide selection of beans. They want a service level of 85% (i.e., z=1.037 on p. 319). The lead time for George's Own Beans is 2 weeks. The standard deviation of demand is 50 cans a week. The order quantity is 1,000 cans. the average weekly demand is 200 cans. What is the reorder point (ROP) for George's Own Beans? (select the closest number below) a. 50
b. 200 c. 400 d. 473 ROP = LTD + Is = 2200+1.03750*sqrt(2) = 473 If there is no uncertainty in demand (i.e.,Standard deviation = 0) and the lead time is 2 weeks and the demand per week is 1,000, what is the LTD? a. 0 b. 1,000 c. 2,000 d. 3,000 LTD = RL = Demand / period Number of periods. LTD = 1,000 * 2 = 2,000 Our book states that the 'Newsvendor' problem is concerned with: a. making purchasing/production decisions when there is scale economies and uncertainty in the supply market.. b. making purchasing/production decisions when there is perishability due to short product life cycles or spoilage and there are scale economies available. c. making purchasing/production decisions when the desired service level is uncertain, but the item is not perishable and is carried in stock. d. making purchasing/production decisions when there is uncertainty and there is perishability due to short product life cycles or spoilage. Paper4U is a chain of office supply stores. Their competitive advantage is that they stock a full line of office papers. They try to stay in stock on every type of paper they have, so their service level is 90% (z=1.281, p. 319). Their demand for one type of recycled paper is 1,000 boxes a week. Their lead time for this paper is 3 weeks. The standard deviation of demand is 150 a week. Their ROP is: a. 450 b. 1,000 c. 1,280 d. 3,000 e. 3,330 ROP = LTD + Is 1,000/week3weeks+1.281150*sqrt(3)=
The book argues that the basic concept of aggregation (i.e., pooling demand for several similar products) improves forecasts because of the statistical properties involved and that operations can exploit these statistical properties. (p. 187) The reason that physical centralization can be effective is best stated as: a. Stocking N items with independent demand in one location (where N is the number of items stocked) increases the average lead time demand by the square root of N. So less stock is needed to cover the LTD when independent demands are pooled. b. Stocking N items with independent demand in one location (where N = number of items) reduces the total reorder point (ROP) compared to when inventory is carried at N locations by increasing the total safety inventory required for a specific level of service due to the square root law, while decreasing the order quantities. c. Stocking N items with independent demand in one location (where N = number of items) reduces the total reorder point (ROP) compared to when the inventory is carried at N locations (i.e., ROP centralized = sum(ROP)/N) d. Stocking N items with independent demand in one location (where N is the number of items stocked) increases the average lead time demand by a multiple of N, but increases the standard deviation by a factor of the square root of N. So, less safety stock is needed when independent demands are pooled. The manager of the customer fulfillment center at CornFib is trying to determine whether to use cycle service level or fill rate as the performance measure for the fulfillment center. CornFib stocks an assortment of fiber optic cables and connectors. Its customers are computer installers, who are very sensitive about order fulfillment. Many customers will place orders for a large number of items, but if any cannot be shipped within 48 hours of the order, they will place the entire order (including items that are in stock at CornFib) with one of CornFib's competitors. They state that there are fewer compatability issues when the connectors and cables all come from one supplier. Based on the discussion in our book, select the best performance measure and the reason it should be used below. a. Fill rate, since the actual demand will be known and the service level provides information about the items in stock. b. Cycle service level, since it is an accurate measurement of the percentage of times that an item stocks out during an order cycle. This measure will allow the manager to take action by stocking more of the items with high stockout proportions. c. Fill rate, since the actual demand is known and can be easily captured by the customer fulfillment center. The fill rate will give the manager information about what types of order combinations are not unfilled. d. Cycle service level, because it is very difficult to measure fill rate, since that requires knowledge of demand A Dry Cleaners uses 2 customer service representatives during its busy periods. During these periods, the server utilization is 80%. The Ci and Cp both equal 1. How many customers are waiting in line? a. 0.8 b. 0.9 c. 2.0 d. 2.9 According to our book, safety time is: a. the time margin that we should allow over and above the expected time to deliver service in order to ensure that we will be able to meet the promised date with high probability. b. the practice of promising a time frame within which the product will be delivered, so that the due date promised - the date the promise was made is the safety time. c. the time within which a manual labor task can be performed safely without fear of ergonomic injury d. None of the above If there is one server at a dry cleaners taking clothes from the customer and getting the cleaned clothes from the clean rack, giving them to the customer and taking payments, this service is referred to as: a. single-phase service process b. a four phase service process c. a service process without variance d. a multiple phase service process In Chapter 8, the authors (Anupindi et al.) argue that it is not enough to consider only the average value of performance measures such as the 'average queue length' and the 'average waiting time.' The reason(s) they give for this are: a. customer's tolerance for waiting decreases with the duration of the wait. b. those who wait longer are more dissatisfied than those who wait for shorter times. c. it would help manage the process to know the probability that a customer may have to wait longer than a specified duration of time that is considered acceptable. d. All of the above
In a service process, the flow unit is the customer or a job order. When a server is not immediately available to process a customer, the customer waits in a queue. Since a customer is not 'inventory' the cost of the customer waiting is not the cost of storage or the cost of inventory holding, it is rather the cost of customer dissatisfaction. But, even when average capacity exceeds demand by 20%, there are often queues. The explanation given by our book for this is that: a. servers that are not pushed (i.e., there is a lot of idle time in the system) lose their desire to work hard when the customers arrive b. there is variability in the arrival of customers and variability in the processing times of customers. c. when the server has multiple tasks to perform, they can make mistakes, which leads to reprocessing and delays everyone waiting for the service. d. a single phase service design in which each customer is processed by one server, who performs all tasks, creates a backlog whenever the server tries to rush and makes a mistake. In chapter 8, the term blocking refers to: a. arrivals cannot get into the process because input buffers have only limited capacity to accommodate them. b. a term used in strategic analysis that refers to the actions of one company to prevent another company from getting a foothold or initial entrance into a particular business. c. a football term that refers to one player preventing another from being able to reach and tackle the football carrier. d. the efforts of politicians to prevent the spread of financial meltdowns to a small portion of the economy. In equation 8.9, the book introduces the coefficients of variation. It uses the symbol Ci, Cp, where both are capital C's for the coefficient of variation of interarrival times and processing times respectively. The coefficient of variation for an unmanaged service process (i.e., one without appointments such as McDonald's) has Ci = 1.0. The coefficient of variation for a service process involving the customer as an active participant (e.g., a customer check-out line at the supermarket) has an exponential distribution and the Cp = 1.0. Given this information, the second factor in equation 8.9 on p. 215 for a fast-food restaurant is: [Show Less]
