Solution manual for matching supply with demand an introduction to operations management 5th edition cachon

SOLUTION MANUAL FORc c


MatchingcSupplycwithcDemandcAncIntroductionctocOperationscManagement,c5thcEditioncCachoncC
hapterc2-19

Chapterc2
ThecProcesscViewcofcthecOrganization

Q2.1cDell
ThecfollowingcstepscrefercdirectlyctocExhibitc2.1.
#1:cForc2001,cwec findcinc Dell’sc10-k:c Inventoryc=c$400c(incmillion)
#2:cForc2001,cwecfindcincDell’sc10-k:c COGSc=c$26,442c(incmillion)
26,c442$/cyearc
#3:cInventorycturnscc c66.105cturnscpercyearc400$
40%c perc year
#4:cPercunitcInventoryc costc c0.605%cpercyear
66.105cperc year

Q2.2.cAirline
WecusecLittle’sclawctoccomputecthecflowctime,csincecwecknowcbothcthecflowcratecascwellcasc
thecinventoryclevel:
FlowcTimeccInventory/cFlowcRatecc35cpassengers/c255cpassengerscperchourcc0.137chours
c8.24cminutes

Q2.3cInventorycCost
(a) Salescc$60,000,000cperc yearc/c$2000cpercunitc c30,000cunitscsoldcperc yearcIn
ventorycc$20,000,000c/c$1000cpercunitc c20,000cunitscincinventory

FlowcTimeccInventory/cFlowcRatecc20,000c/c30,000cperc yearcc2c/c3cyearcc8cmonthscTurnscc
1/cFlowcTimecc1/(2c/c3cyear)cc1.5cturnsc perc year

Note:cweccancalsoc getcthiscnumbercdirectlycbycwriting:c InventorycturnsccCOGSc/cInventory

(b) CostcofcInventory:c25%cpercyearc/1.5cturnscc16.66%.cForcac$1000cproduct,cthiscwouldcma
kecancabsolutecinventoryccostcofc $166.66c.

Q2.4.cApparelcRetailing

(a) Revenuecofc $100McimpliescCOGScofc $50Mc (becausecofcthec100%cmarkup).
TurnsccCOGS/cInventorycc$50M/c$5Mcc10c.
(b) Thecinventoryccost,c givenc10cturns,cisc 40%/10cc4%c.cForcac 30$c item,cthecinventorycco
stcisc 0.4c$30cc$1.20cpercunitc.

Q2.5.cLacVilla
(a) FlowcRateccInventoryc/cFlowcTimecc1200cskiersc/10cdayscc120cskiersc perc day
(b) Lastc year:concanycgivencday,c10%c(1cofc10)cofcskierscareconctheircfirstcdaycofcskiing


©cMcGrawcHillcLLC.cAllcrightscreserved.cNocreproductioncorcdistributioncwithoutcthecpriorcwrittencconsentcofc
McGrawcHillcLLC.

, Thiscyear:concanycgivencday,c20%c(1cofc5)cofcskierscareconctheircfirstcdaycofcskiing

Averagecamountcspentcinclocalcrestaurantsc(percskier)
Lastcyearcc0.1$50cc0.9$30cc$32cT
hiscyearc c0.2$50cc0.8$30cc$34
%cchangecc($34c$32)c/c$32cc6.25%cincrease


Q2.6.cHighway
Weclookcatc1cmilecofchighwaycascourcprocess.cSincecthecspeedcisc60cmilescperchour,citctak
escaccarc1cminutectoctravelcthroughcthecprocessc(flowctime).
Therecarec24ccarsconc¼cofcacmile,ci.e.ctherecarec96ccarsconcthec1cmilecstretchc(inventory).cIn
ventoryc=cFlowcRatec*cFlowcTime:c96ccarsc=cFlowcRatec*c1cminute
Thus,cthecFlowcRatecisc96ccarscpercminute,ccorrespondingctoc96*60c=c5760ccarscperchour.


Q2.7.cStrohrmanncBaking
Thecbreadcneedsctocbecincthecovencforc12cminutesc(flowctime).cWecwantctocproducecatcacflo
wcratecofc4000cbreadscperchour,corc 4000/60c=c66.66c breadscpercminute.

Inventoryc=cFlowcRatec*cFlowcTime:cInventoryc=c66.66cbreadscpercminute*c12cminutescT
hus,cInventoryc=c800cbreads,cwhichciscthecrequiredcsizecofcthecoven.

Q2.8.cMtcKinleycConsulting

Wechavecthecfollowingcinformationcavailablecfromcthecquestion:

Level Inventoryc(numbercofcconsultantscat FlowcTimec(timecspentcatcthat
thatclevel) level)
Associate 200 4cyears
Manager 60 6cyears
Partner 20 10cyears

(a) WeccancusecLittle’sclawctocfindcthecflowcratecforcassociatecconsultants:cInventoryc=cFlow
cRatec*cFlowcTime;c200cconsultantsc=cFlowcRatec*c4c years;cthus,cthecflowcratecisc50ccons

ultantscpercyear,cwhichcneedctocbecrecruitedctockeepcthecfirmcincitsccurrentcsizec(note:cwhi
lectherecarecalsoc50cconsultantscleavingcthecassociateclevel,cthiscsayscnothingcaboutchowc
manycofcthemcarecdismissedcvschowcmanycofcthemcarecpromotedctocManagerclevel).

(b) Weccancperformcacsimilarcanalysiscatcthecmanagerclevel,cwhichcindicatescthatcthecflowcra
tectherecisc10cconsultants.cIncorderctochavec10cconsultantscascacflowcratecatcthecmanagercle
vel,cwecneedctocpromotec10cassociatesctocmanagerclevelc(remember,cthecfirmciscnotcrecru
itingctocthechighercrankscfromcthecoutside).cHence,ceverycyear,cwecdismissc40cassociatesc
andcpromotec10cassociatesctocthecmanagerclevelc(thecoddscatcthatclevelcarec20%)




©cMcGrawcHillcLLC.cAllcrightscreserved.cNocreproductioncorcdistributioncwithoutcthecpriorcwrittencconsentcofc
McGrawcHillcLLC.

, Now,cconsidercthecpartnerclevel.cThecflowcratectherecisc2cconsultantscperc yearc(obtainedcviact
hecsameccalculationscascbefore).cThus,cfromcthec10cmanagerccasescwecevaluateceverycyear,c8c
arecdismissedcandc2carecpromotedctocpartnerc(thecoddscatcthatclevelcarectherebycalsoc20%).

Incorderctocfindcthecoddscofcacnewchirectocbecomecpartner,cwecneedctocmultiplycthecpromotion
cprobabilities:c0.2*0.2c=c0.04.cThus,cacnewchirechas cac4%cchancecofcmakingcitctocpartner.




Q2.9.cMajorcUScRetailers
a. Productcstaysconcaveragecforc31.9cdayscincCostco’scinventory
b. Costcochascforcac$5cproductcancinventoryccostcofc$0.1311cwhichccomparesctoca
$0.2049c atcWal-Mart

Q2.10.cMcDonald’s
a. InventorycturnscforcMcDonald’scwerec92.3.cTheycwerec30.05cforcWendy’s.
b. McDonald’schascpercunitcinventoryccostscofc0.32%,cwhichcforcac3$cmealcabout
$0.00975.cThatccomparesctoc0.998%catcWendy’scwherecthec costcpercmealcisc $0.0299c.

Q2.11.cBCH
Ic=c400cassociates,cTc=c2cyears.c RccIc/cTcc400cassociatesc/c2cyrscc200cassociatesc/cyrc.

Q2.12.cKroger
TurnsccRc/cIcc76858c/c6244c12.3



Matching Supply with Demand: An Introduction to Operations Management5e
c c c c c c c c c




SolutionsctocChaptercProblemscC

hapterc3
UnderstandingcthecSupplycProcess:cEvaluatingcProcesscCapacity


Q3.1cProcesscAnalysiscwithcOnecFlowcUnit
(a) Capacitycofcthecthreecresourcescincunitscperchourcarec602c/10c12c,c601/c6c10;c603c
/16c11.25c.cThecbottleneckciscthecresourcecwithctheclowestccapacity,cwhichciscresourc
ec2.
(b) Thecprocessccapacitycisctheccapacitycofcthecbottleneck,cwhichcisc 10cunits/hrc.
(c) Ifc demandcc8cunitsc/chrc,cthencthecprocessciscdemandcconstrainedcandcthecflowcratecis
8cunits/hr
(d) Utilizationc=cFlowcRatec/cCapacityc.c Forcthecthreecresourcesctheycarec 8c/c12c,c 8c/c10c,cand
8c/11.25c.




©cMcGrawcHillcLLC.cAllcrightscreserved.cNocreproductioncorcdistributioncwithoutcthecpriorcwrittencconsentcofc
McGrawcHillcLLC.

, Q3.2cProcesscAnalysiscwithcMultiplecFlowcUnits
a) Bottleneckciscresourcec3cbecausecitchascthechighestcimpliedcutilizationcofc125%.cThecdeman
dscperchourcofcthec threecproductscarec 40c/c8cc5 , c 50c/c8cc6.25candc 60c/c8cc7.5.c Thectotalcminut
escofcworkcdemandedcperchourcatcresourcec1cisc5c×c5c+c6.25c*c5c+c7.5c*c5c=
93.75.cTwocworkerscatcresourcec1cproducec2c*c60c=c120cmincofcworkcperchour.cSocre
sourcec1’scutilizationcisc93.75c/120cc0.78.cUtilizationcatcthecothercresourcescarecsimi
larlycevaluated.
b) Theccapacitycofcresourcec3cisc60c/15cc4cunitscperchour.cGivencthecratiocofcunitscproducedcmu
stcbec4ctoc5ctoc6,cthecprocessccancproducec 4cunits/chrc ofcA,c 5cunitsc/chrcofcBcand
6cunitsc/chrcofcC.


Q3.3.cCranberry
Cranberriescarrivecatcacratecofc150cbarrelscperchour.cTheycgetcprocessedcatcacratecofc100cbarrelscperc
hour.cThus,cinventorycaccumulatescatcacratecofc150-
100c=c50cbarrelscperchour.cThischappenscwhilectruckscarrive,ci.e.cfromc6amctoc2pm.cThechighestcinv
entoryclevelctherebycisc8h*50cbarrelscperchourc=c400cbarrels.cFromcthesec400cbarrels,c200cbarrelsca
recincthecbins,cthecotherc200cbarrelscarecinctrucks.
(a) 200cbarrels
(b) Fromc2pmconwards,cnocadditionalccranberriescarecreceived.cInventorycgetscdepletedcatcacratecof
c100cbarrels cperchour.cThus,citcwillctakec2hcuntilcthecinventoryclevelchascdroppedctoc200cbarrels,

catcwhichctimecallcwaitingccranberriesccancbecstoredcincthecbinsc(nocmorectruckcwaiting)

(c) Itcwillctakecanotherc2chourscuntilcallcthecbinscarecempty
(d) Sincecthecseasonalcworkersconlycstartcatc10:00am,cthecfirstc4chourscofcthecdaycwecaccumulatec4h
oursc*c50barrelscperchourc=c200cbarrels.cForcthecremainingctimecthatcwecreceivecincomingccranb
erries,courcprocessingcratecischigherc(125cbarrelscperchour).cThus,cinventoryconlycaccumulatescatc
acratecofc25c(150-
125cbarrelscperchour).cGivencthatcthischappenscoverc4chours,cwecgetcanotherc100cbarrelscincinvent
ory.cAtc2pm,cwectherebychavec300cbarrelscincinventory.cAfterc2pm,cwecreceivecnocfurtherccranbe
rries,cyetcwecinitiallycprocessccranberriescatcacratecofc125cbarrelsc perc hour.c Thus,c itc onlyctakesc 10
0cbarrelsc/125cbarrels/hourc c0.8chourscc48cminutes
untilcallcbinscarecempty.cFromcthen,cwecneedcanotherc2hcuntilcthecbinscarecempty.


Q3.4.cWesterncPennsylvaniacMilk
Wecstartcthecdaycwithc25,000cgallonscofcmilkcincinventory.cFromc8amconwards,cwecproducec5,000cga
llons,cyetcwecshipc10,000cgallons.cThuscinventoryciscdepletedcatcacratecofc5000cgallonscperchour,cwhic
hcleavescuscwithoutcmilkcafterc5choursc(atc1pm).cFromcthenconwards,cclientscwillchavectocwait.cThiscs
ituationcgetscworsecandcworsecandcbyc6pmc(lastcclientcarrives),cwecarecshortc25,000cgallons.
(a) 1pm
(b) Clientscwillcstopcwaitingcwhencwechavecworkedcoffcourc25,000cgalloncbacklogcthatcwecarecfa
cingcatc6pm.cSincecwecarecdoingcthiscatcacratecofc5,000cgalloncperchour,cclientscwillcstopcwaiti
ngcatc11pmc(afterc5cmorechours).
(c) Atc6pm,cwechavecacbacklogcofc25,000cgallons,cwhichciscequivalentctoc20ctrucks
(d) Thecwaitingctimeciscthecareacincthectriangle



©cMcGrawcHillcLLC.cAllcrightscreserved.cNocreproductioncorcdistributioncwithoutcthecpriorcwrittencconsentcofc
McGrawcHillcLLC.