Ace Snacks Company supplies Ace Chips to 20 different stores located throughout Singapore. Based on their sales
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Ace Snacks Company supplies Ace Chips to 20 different stores located throughout Singapore. Based on their sales volume, the company categorised the stores into two classes - High (H) and Low (L). Table 1 represents monthly demand data for these store classes (assume demand from the stores occurs at constant rate): Table 1 : Monthly Demand for Ace Chips
The company allocated two managers to handle these two store classes. The managers work independently and do not combine demands from the two classes. But they combine demands from all the stores under their account and ship the optimal quantity to the stores by trucks, from the manufacturing plant located at Tuas. The transport cost for each shipment is $300. Each packet of chips costs $5. The holding cost for one packet is 20% of the item cost per year.
Figure 2: Summary Output of the Regression Analysis (i) What would be the demand for Yellow and Red paints in last quarter of 2015 and first quarter of 2020, based on the regression equation? Hint: The independent variable here is Quarter (1, 2, 3,....) (8 marks) (ii) It was later found that the realised demand for these quarters were 8,000 and 12,000 respectively for Yellow paints and 10,000 and 14,500 respectively for Red paints. Using MAD, determine whether the forecast for Yellow paints is better than the forecast for Red paints. In your opinion, how reliable is this result? (8 marks) (c) Appraise the quality of demand forecasts for Yellow and Red paints by examining two (2) pieces of data from the summary output shown in Figure 2. (5 marks) Question 4 HiTech Pvt Ltd manufactures chip XX12 which is used in laptops of several brands. To manufacture one XX12 chip, 12 units of part XA11, 10 units of part XB12 and 20 units of part XC13 are needed. Part XA11 is made of 2 units of component AA11, 2 units of component AA12 and 2 units of component BB11. Each unit of part XC13 is made of 6 units of component BB11 only. According to MPS, the company needs to deliver two shipments of XX12 chip by week 6 and week 8. The required numbers of chips to be delivered are shown in the Table 2, depending on the last two digits of your Student PI number. Choose one of the three scenarios that applies to you. Table 2: Number of XX12 Required
More details for the parts and components are shown in Table 3. Table 3: Details about the required items
Store classes | No of stores | Average demand per store (packets) |
H | 12 | 500 |
L | 8 | 200 |
Total | 20 |
- Solve for the optimal total annual variable cost for Ace Chips from this strategy. (10 marks)
- Ace Snacks realised that the above strategy uses LTL (less than truckloads) for the shipments, rather than FTL (full truck load). The company plans to place itself as a socially responsible company and wants to reduce its carbon footprint. Since LTL does not use the available space in the truck, the company decides to employ full truckload for all its shipment, although it may incur higher cost compared to the existing strategy.
- Can you propose a better strategy which overcomes some of the problems of the above strategies? You do not have to show that your strategy performs better than the proposed strategy.
Regression Statistics | |||
Yellow | Red | ||
Multiple R | 0.955412699 | Multiple R | 0.931048614 |
R Square | 0.912813426 | R Square | 0.866851522 |
Adjusted R Square | 0.906585814 | Adjusted R Square | 0.857340916 |
Standard Error | 345.5089346 | Standard Error | 509.7729917 |
Observations | 16 | Observations | 16 |
Coefficients | Coefficients | ||
Intercept | 2592.75 | Intercept | 3611.98 |
X Variable 1 | 226.85 | X Variable 1 | 263.94 |
Last 2 digits of Student | XX12 needed at Week | XX12 needed at Week |
PI Number | 6 | 8 |
00-33 | 120 | 100 |
34-66 | 150 | 120 |
67-99 | 80 | 60 |
Item | Stock on hand | Minimum stock | Lead Time | Scheduled Receipts | Lot Size |
XX12 | 40 | 0 | 2 | ||
XA11 | 460 | 100 | 2 | ||
XB12 | 680 | 0 | 1 | 500 on week 4 | |
XC13 | 820 | 200 | 2 | ||
AA11 | 720 | 0 | 1 | 1000 on week 3 | |
AA12 | 1240 | 0 | 2 | 1000 | |
BB11 | 2400 | 0 | 1 | 2000 |
- Apply the Material Requirements Planning (MRP) approach to develop the bill of materials for XX12. Identify the different levels.
- Implement MRP to schedule orders for the items XX12, XA11, XC13, AA11 and BB11 and the timing of those orders. In your answer, you should use the Material Requirement Planning Worksheet provided in Appendix B. Remember to fill up the relevant information in the worksheet.
Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118856994
4th Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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