Question 1

Average daily demand for a I-pad in best buy is 20 units. The review period is 30 days, and lead time is 10 days. Management has set a policy of satisfying 96 percent of demand from items in stock. At the beginning of the review period there are 150 units in inventory. The standard deviation of daily demand is 3 units. How many units should be ordered (5 points)?

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Question 2

The Good and Gooey Candy Company produces 14,000 pounds of chocolate covered cherries each quarter, the holding cost for chocolate covered cherries is 5% of cost per pound and the cost of setting up the machines to produce chocolate covered cherries is $100. Further, production costs depend on the quantity produced after each setup and appear in the table below.

Production Quantity	Cost per pound
0-1500 lbs	$1.20
1501-2500 lbs	$0.98
2501+ lbs	$0.87

Find the optimal quantity for the Good and Gooey Candy Company to produce for each setup. (10 points) Show all of your work.

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Question 3

The I-75 Carpet discount store has annual demand of 85,700 yards for Super Resistant carpet. The annual carrying cost for a yard of this carpet is $2.25 per yard and the ordering cost is $350. The store is open 52 weeks per year. Assume that the expected value of daily demand is 300, that the standard deviation for daily demand is 4 and that the lead time to fill an order is 8 days. Assume that the EOQ is 5164 yards. What would be the reorder point for a 99% service level? Show all of your work (5 points).

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Question 4

The I-75 Carpet discount store has annual demand of 85,700 yards for Super Resistant carpet. The annual carrying cost for a yard of this carpet is $2.25 per yard and the ordering cost is $350. The store is open 52 weeks per year. Assume that the expected value of daily demand is 300, that the standard deviation for daily demand is 5 and that the lead time to fill an order is 7 days. Assume that the EOQ is 5164 yards. What would be the reorder point for a 96% service level? Show all of your work (5 points).

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Question 5

The J&B Card Shop sells calendars which it purchases once each year. Demand for calendars follows approximately a normal distribution with mean 1800 and standard deviation 75. The calendars cost $2.98 each and J&B sells them for $10.01. At the end of the selling season J&B can sell any surplus calendars for $0.90 What would be the optimal order quantity? Show all of your work (5 points).

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Question 6

The City Square Grocery and Meat Market has a large meat locker in which a temperature between 38.1F and 50.9F should be maintained. The manager has a market employee take temperature readings at random seven times per day to create a sample. Historical data suggests that the process mean is 43.2F, the process standard deviation is 0.9F and the process range has averaged 2.1F. Find the upper and lower control limits for an X-chart used without an R-chart if samples of size seven are used. Show all of your work (5 points).

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Question 7

The City Square Grocery and Meat Market has a large meat locker in which a temperature between 38.1F and 50.9F should be maintained. The manager has a market employee take temperature readings at random seven times per day to create a sample. Historical data suggests that the process mean is 43.2F the process standard deviation is 0.9F and the process range has averaged 2.1F. Find the upper and lower control limits for an R-chart if samples of size six are used. Show all of your work (5 points).

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Question 8

The City Square Grocery and Meat Market has a large meat locker in which a temperature between 38.1F and 50.9F should be maintained. The manager has a market employee take temperature readings at random seven times per day to create a sample. Historical data suggests that the process mean is 43.2F the process standard deviation is 0.9F and the process range has averaged 2.1F. Assuming the process is in control calculate the capability index and indicate if the process is capable. Show all of your work (5 points).

Solution: