QUESTION ONE:

Suppose the optimal reorder interval, T*, for an EOQ environment is 48 days. Find the best power of two reorder interval in days, T', and calculate the percentage increase in annual relevant cost corresponding to your power of two reorder interval relative to using the optimal reorder interval. (If the annual relevant cost for reorder interval T is denoted by Z(T), then the required % is the ratio [Z(T') - Z(T*)]/Z(T*) expressed as a % by multiplying by 100. Pick the choices that is satisfied by your Power of Two reorder interval, T', and the percentage increase in annual relevant cost.

Group of answer choices (Select all apply)

T' <= 16 days

T' = 32 days

T' = 64 days

T' >= 128 days

% cost increase <= 3%

% cost increase > 3% but <= 6%

% cost increase > 6% but <=9%

% cost increase > 9%

Cannot determine % cost increase as values for A, h, D are not given, so cost A(D)/Q + hQ/2 cannot be calculated

QUESTION TWO:

LCB-Balsa, Inc. produces two models of toy airplanes, for which the relevant data are summarized below:

All data are per unit of product	Toy Airplane "P"	Toy Airplane "Q"
Selling price	52 $/unit	44 $/unit
Labor required	0.5 hour/unit	1 hour/unit
Machining time required	1.5 hour/unit	0.8 hour/unit
Raw material required per unit	2 bf/unit	1 bf/unit
Maximum weekly demand	160 units	100 units

Each week, up to 350 board feet (bf) of raw material is available at a cost of $5/bf. The company employees five workers, who work 40 hours per week for a total regular-time labor supply of 200 hours per week. They work regardless of production volumes, so their salaries are treated as a fixed cost; the wage rate is 10$/hour, per worker (production is in a foreign country so rates are converted into US $). There are 400 hours per week of machining time available (if useful, you can think that each worker can operate two machines concurrently). The relevant weekly operating cost for 400 hours of machine time is only 2000$, corresponding to a cost rate = 5 $/hour of machine time (machines are old and paid for).

Bottleneck: Which resource - labor, machine time, raw material - is the bottleneck and what is the highest implied utilization ratio? Note: It is not possible to compare the total amount needed of machining time (in hours) and raw material (in board feet), to determine which is more restrictive. I suggest you consider an "implied utilization" ratio = amount of resource needed divided by the amount of resource available. The resource with the highest implied utilization ratio is the most restrictive or the biggest bottleneck. If the ratio is > 1, resource amount needed exceeds amount available.

Group of answer choices (Select all apply)

Labor

Machine Time

Raw Material

Cannot determine the bottleneck resource

Bottleneck Implied Utilization < 100%

100 <= Bottleneck Implied Utilization < 115

115 <= Bottleneck Implied Utilization < 130

130 <= Bottleneck Implied Utilization < 145

145 <= Bottleneck Implied Utilization < 160

160 <= Bottleneck Implied Utilization

Cannot specify Bottleneck Implied Utilization