1. In general, the higher variability (in arrival rate or service rate) is, the bigger the negative impact on flow time, WIP, and throughput.

a) True

b) False

2. In a JIT implementation, companies typically deal with a large number of suppliers for any given assembly part, because supplier competition drives down the cost of the part.

a) True

b) False

3. What happens in a queuing system as utilization approaches 1?

a) The average number in the system decreases

b) The average number in the queue decreases

c) The average waiting time in the queue increases

d) The average time in the system decreases

4. GameStop is trying to find the average absolute deviation from monthly forecasts in number of units for Play Station 5 consoles over a 1 year period. Which error metric should they use?

a) MAE

b) MAPE

c) MRP

d) MSE

5. A fast food outlet has an average of 8 cars at the drive-through system during lunch hours. On average, 2 cars per minute arrive at the restaurant and consider the drive-through. But 25% of the time, an arriving car does not actually enter the drive-through line. All cars that enter the line do complete the drive-through service. On average, how much time does a car spend in the drive-through system? How much time in line?

6. A toy manufacturer assembles 800 trucks/day, 365 days/year. Demand is constant, and each truck has one cab that the manufacturer purchases from a supplier for $0.50/cab. In addition to the purchase price of the cab, there is a fixed shipping charge of $75 per order, plus $0.05 shipping cost per cab. The daily holding cost is 0.1%.

a. What is the appropriate inventory control model, and why?

b. Calculate the optimal number of cabs to order each time. How are you using the $0.05 shipping cost per cab?

c. What is the yearly inventory cost of using your choice of inventory control model?

7. A different toy manufacturer assembles on average 500 toy trucks per day, but that quantity varies with a standard deviation of 25 units per day. Each truck has one cab that the manufacturer purchases from a supplier. It usually takes 15 days for the supplier to ship the cabs (including travel time) to the manufacturers location. The manufacturer uses a (Q,R)-system to manage its inventory and maintains a service level of 95%.

a. Calculate safety stock for the cabs (assume demand follows normal distribution).

b. What is the reorder point?

c. Assume that EOQ is 11677 units. What is the average number of cabs on hand?

8. You are managing inventory for a new line of mens casual shirts with a surfing theme. This line will be sold during the four-month period of May through August 2023 only. The shirts are made by a supplier off-shore. Due to sourcing lead times, replenishing within the sales period is not possible, so all shirts must be procured in a single order.

Based on previous years data, you expect that monthly demand for these shirts will be normally distributed, with a mean of 750 and a standard deviation of 250. Each shirt will be priced at $75, and your wholesale cost per shirt is $30. You plan to sell any unsold shirts after the four months to Nordstrom Rack. NR will pay you $10 for each shirt.

a. What inventory control method is most applicable to this problem, and why?

b. What is the total mean demand and total standard deviation for the four-month period?

c. What is the optimal stock quantity for this shirt?

In the event of a stock out, customers may be lost for the long term. Management has given this negative consequence a name, goodwill cost and assigned it a value of $20, for each time a stock out happens.

d. Recalculate optimal stock quantity, taking into account this additional goodwill cost.

9. Stardollars has recently introduced a new line of drink that features yummy sprinkles on top. Each drink requires 1 packet of the sprinkles. This drink is becoming very popular very fast, and Stardollars would like to forecast demand using an exponential smoothing forecast method with = 0.5. Previous actual sales record were: September (1400), August (1000), July (1200), June (800).

a. Given initial forecast at launch in June was 600 packets, what is the forecast of sprinkle packets for October?

Period	Ft-1	At-1	Ft	4-mo SMA
June	-	-	600	600
July	600	800		600
August		1200		600
September		1000		600
October		1400		1100

b. Are your monthly forecasts Ft always better (closer to actual demand) than the forecasts obtained from 4-months simple moving average?