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

SOLUTION MANUAL FORu u


MatchinguSupplyuwithuDemanduAnuIntroductionutouOperationsuManagement,u5thuEditionuCachonu
Chapteru2-19

Chapteru2
TheuProcessuViewuofutheuOrganization

Q2.1uDell
TheufollowingustepsureferudirectlyutouExhibitu2.1.
#1:u Foru2001,u weu finduinu Dell’su 10-k:u Inventoryu=u$400u(inumillion)
#2:uForu2001,uweufinduinuDell’su10-k:u COGSu=u$26,442u(inumillion)
26,u442$/uyearu
#3:uInventoryuturnsuu u66.105uturnsuperuyearu400$
40%u peru year
#4:uPeruunituInventoryu costu u0.605%uperuyear
66.105u peru year

Q2.2.uAirline
WeuuseuLittle’sulawutoucomputeutheuflowutime,usinceuweuknowubothutheuflowurateuasuwellua
sutheuinventoryulevel:
FlowuTimeuuInventory/uFlowuRateuu35upassengers/u255upassengersuperuhouruu0.137uhours
u8.24uminutes

Q2.3uInventoryuCost
(a) Salesuu$60,000,000uperu yearu/u$2000uperuunitu u30,000uunitsusolduperu yearuI
nventoryuu$20,000,000u/u$1000uperuunitu u20,000uunitsuinuinventory

FlowuTimeuuInventory/uFlowuRateuu20,000u/u30,000u peru yearuu2u/u3uyearuu8umonthsuTurnsu
u1/uFlowuTimeuu1/(2u/u3uyear)uu1.5uturnsu peru year

Note:uweucanualsou getuthisunumberudirectlyubyuwriting:u InventoryuturnsuuCOGSu/uInventory

(b) CostuofuInventory:u25%uperuyearu/1.5uturnsuu16.66%.uForuau$1000uproduct,uthisuwoulduma
keuanuabsoluteuinventoryucostuofu $166.66u.

Q2.4.uAppareluRetailing

(a) Revenueuofu $100MuimpliesuCOGSuofu $50Mu (becauseuofutheu100%umarkup).
TurnsuuCOGS/uInventoryuu$50M/u$5Muu10u.
(b) Theuinventoryucost,u givenu10u turns,uisu 40%/10uu4%u.u Foruau 30$u item,u theu inventoryuc
ostuisu 0.4u$30uu$1.20uperuunitu.

Q2.5.uLauVilla
(a) FlowuRateuuInventoryu/uFlowuTimeuu1200uskiersu/10udaysuu120uskiersu peru day
(b) Lastu year:uonuanyugivenuday,u10%u(1uofu10)uofuskiersuareuonutheirufirstudayuofuskiing


©uMcGrawuHilluLLC.uAllurightsureserved.uNoureproductionuorudistributionuwithoututheuprioruwrittenuconsentuofu
McGrawuHilluLLC.

, Thisuyear:uonuanyugivenuday,u20%u(1uofu5)uofuskiersuareuonutheirufirstudayuofuskiing

Averageuamountuspentuinulocalurestaurantsu(peruskier)
Lastuyearu u0.1$50uu0.9$30uu$32u
Thisu yearu u0.2$50uu0.8$30uu$34
%uchangeuu($34u$32)u/u$32uu6.25%uincrease


Q2.6.uHighway
Weulookuatu1umileuofuhighwayuasuouruprocess.uSinceutheuspeeduisu60umilesuperuhour,uituta
kesuaucaru1uminuteutoutraveluthroughutheuprocessu(flowutime).
Thereuareu24ucarsuonu¼uofuaumile,ui.e.uthereuareu96ucarsuonutheu1umileustretchu(inventory).uIn
ventoryu=uFlowuRateu*uFlowuTime:u96ucarsu=uFlowuRateu*u1uminute
Thus,utheuFlowuRateuisu96ucarsuperuminute,ucorrespondingutou96*60u=u5760ucarsuperuhour.


Q2.7.uStrohrmannuBaking
Theubreaduneedsutoubeuinutheuovenuforu12uminutesu(flowutime).uWeuwantutouproduceuatuaufl
owurateuofu4000ubreadsuperuhour,uoru 4000/60u=u66.66u breadsuperuminute.

Inventoryu=uFlowuRateu*uFlowuTime:uInventoryu=u66.66ubreadsuperuminute*u12uminutesuT
hus,uInventoryu=u800ubreads,uwhichuisutheurequiredusizeuofutheuoven.

Q2.8.uMtuKinleyuConsulting

Weuhaveutheufollowinguinformationuavailableufromutheuquestion:

Level Inventoryu(numberuofuconsultantsuat FlowuTimeu(timeuspentuatuthat
thatulevel) level)
Associate 200 4uyears
Manager 60 6uyears
Partner 20 10uyears

(a) WeucanuuseuLittle’sulawutoufindutheuflowurateuforuassociateuconsultants:uInventoryu=uFlo
wuRateu*uFlowuTime;u200uconsultantsu=uFlowuRateu*u4uyears;uthus,utheuflowurateuisu50uc
onsultantsuperuyear,uwhichuneedutoubeurecruitedutoukeeputheufirmuinuitsucurrentusizeu(note:
uwhileuthereuareualsou50uconsultantsuleavingutheuassociateulevel,uthisusaysunothinguaboutu

howumanyuofuthemuareudismisseduvsuhowumanyuofuthemuareupromotedutouManagerulevel
).

(b) Weucanuperformuausimilaruanalysisuatutheumanagerulevel,uwhichuindicatesuthatutheuflowur
ateuthereuisu10uconsultants.uInuorderutouhaveu10uconsultantsuasuauflowurateuatutheumanager
ulevel,uweuneedutoupromoteu10uassociatesutoumanagerulevelu(remember,utheufirmuisunoture

cruitingutoutheuhigheruranksufromutheuoutside).uHence,ueveryuyear,uweudismissu40uassoci
atesuandupromoteu10uassociatesutoutheumanagerulevelu(theuoddsuatuthatuleveluareu20%)




©uMcGrawuHilluLLC.uAllurightsureserved.uNoureproductionuorudistributionuwithoututheuprioruwrittenuconsentuofu
McGrawuHilluLLC.

, Now,uconsiderutheupartnerulevel.uTheuflowurateuthereuisu2uconsultantsuperu yearu(obtaineduviau
theusameucalculationsuasubefore).uThus,ufromutheu10umanagerucasesuweuevaluateueveryuyear,u
8uareudismisseduandu2uareupromotedutoupartneru(theuoddsuatuthatuleveluareutherebyualsou20%).

Inuorderutoufindutheuoddsuofuaunewuhireutoubecomeupartner,uweuneedutoumultiplyutheupromotio
nuprobabilities:u0.2*0.2u=u0.04.uThus,uaunewuhireuhasuau4%uchanceuofumakinguitutoupartner.


Q2.9.uMajoruUSuRetailers
a. Productustaysuonuaverageuforu31.9udaysuinuCostco’suinventory
b. Costcouhasuforuau$5uproductuanuinventoryucostuofu$0.1311uwhichucomparesutoua
$0.2049u atuWal-Mart

Q2.10.uMcDonald’s
a. InventoryuturnsuforuMcDonald’suwereu92.3.uTheyuwereu30.05uforuWendy’s.
b. McDonald’suhasuperuunituinventoryucostsuofu0.32%,uwhichuforuau3$umealuabout
$0.00975.uThatucomparesutou0.998%uatuWendy’su whereutheu costuperumealuisu $0.0299u.

Q2.11.uBCH
Iu=u400uassociates,uTu=u2uyears.u RuuIu/uTuu400uassociatesu/u2uyrsuu200uassociatesu/uyru.

Q2.12.uKroger
TurnsuuRu/uIuu76858u/u6244u12.3



Matching Supply with Demand: An Introduction to Operations Management5
u u u u u u u u u


e
SolutionsutouChapteruProblemsuC

hapteru3
UnderstandingutheuSupplyuProcess:uEvaluatinguProcessuCapacity


Q3.1uProcessuAnalysisuwithuOneuFlowuUnit
(a) Capacityuofutheuthreeuresourcesuinuunitsuperuhouruareu602u/10u12u,u601/u6u10;u60
3u/16u11.25u.uTheubottleneckuisutheuresourceuwithutheulowestucapacity,uwhichuisureso
urceu2.
(b) Theuprocessucapacityuisutheucapacityuofutheubottleneck,uwhichuisu 10uunits/hru.
(c) Ifu demanduu8uunitsu/uhru,uthenutheuprocessuisudemanduconstraineduandutheuflowurateuis
8uunits/hr
(d) Utilizationu=uFlowuRateu/uCapacityu.u Forutheu threeu resourcesu theyuareu 8u/u12u,u 8u/u10u,u and
8u/11.25u.




©uMcGrawuHilluLLC.uAllurightsureserved.uNoureproductionuorudistributionuwithoututheuprioruwrittenuconsentuofu
McGrawuHilluLLC.

, Q3.2uProcessuAnalysisuwithuMultipleuFlowuUnits
a) Bottleneckuisuresourceu3ubecauseuituhasutheuhighestuimplieduutilizationuofu125%.uTheudema
ndsuperuhouruofutheu threeu productsu areu 40u/u8uu5 , u 50u/u8uu6.25uandu 60u/u8uu7.5.u Theutotalumin
utesuofuworkudemandeduperuhouruaturesourceu1uisu5u×u5u+u6.25u*u5u+u7.5u*u5u=
93.75.uTwouworkersuaturesourceu1uproduceu2u*u60u=u120uminuofuworkuperuhour.uSour
esourceu1’suutilizationuisu93.75u/120uu0.78.uUtilizationuatutheuotheruresourcesuareusi
milarlyuevaluated.
b) Theucapacityuofuresourceu3uisu60u/15uu4uunitsuperuhour.uGivenutheuratiouofuunitsuproducedum
ustubeu4utou5utou6,utheuprocessucanuproduceu 4uunits/uhru ofuA,u 5uunitsu/uhruofuBuand
6uunitsu/uhruofu C.


Q3.3.uCranberry
Cranberriesuarriveuatuaurateuofu150ubarrelsuperuhour.uTheyugetuprocesseduatuaurateuofu100ubarrelsupe
ruhour.uThus,uinventoryuaccumulatesuatuaurateuofu150-
100u=u50ubarrelsuperuhour.uThisuhappensuwhileutrucksuarrive,ui.e.ufromu6amutou2pm.uTheuhighestuin
ventoryulevelutherebyuisu8h*50ubarrelsuperuhouru=u400ubarrels.uFromutheseu400ubarrels,u200ubarrel
suareuinutheubins,utheuotheru200ubarrelsuareuinutrucks.
(a) 200ubarrels
(b) Fromu2pmuonwards,unouadditionalucranberriesuareureceived.uInventoryugetsudepleteduatuaurateuo
fu100ubarrelsuperuhour.uThus,uituwillutakeu2huuntilutheuinventoryuleveluhasudroppedutou200ubarre
ls,uatuwhichutimeualluwaitingucranberriesucanubeustoreduinutheubinsu(noumoreutruckuwaiting)
(c) Ituwillutakeuanotheru2uhoursuuntiluallutheubinsuareuempty
(d) Sinceutheuseasonaluworkersuonlyustartuatu10:00am,utheufirstu4uhoursuofutheudayuweuaccumulateu4h
oursu*u50barrelsuperuhouru=u200ubarrels.uForutheuremainingutimeuthatuweureceiveuincomingucran
berries,uouruprocessingurateuisuhigheru(125ubarrelsuperuhour).uThus,uinventoryuonlyuaccumulatesu
atuaurateuofu25u(150-
125ubarrelsuperuhour).uGivenuthatuthisuhappensuoveru4uhours,uweugetuanotheru100ubarrelsuinuinve
ntory.uAtu2pm,uweutherebyuhaveu300ubarrelsuinuinventory.uAfteru2pm,uweureceiveunoufurtherucra
nberries,uyetuweuinitiallyuprocessucranberriesuatuaurateuofu125u barrelsu peru hour.u Thus,u itu onlyutak
esu 100ubarrelsu/125ubarrels/houru u0.8uhoursuu48uminutes
untiluallubinsuareuempty.uFromuthen,uweuneeduanotheru2huuntilutheubinsuareuempty.


Q3.4.uWesternuPennsylvaniauMilk
Weustartutheudayuwithu25,000ugallonsuofumilkuinuinventory.uFromu8amuonwards,uweuproduceu5,000ug
allons,uyetuweushipu10,000ugallons.uThusuinventoryuisudepleteduatuaurateuofu5000ugallonsuperuhour,uwh
ichuleavesuusuwithoutumilkuafteru5uhoursu(atu1pm).uFromuthenuonwards,uclientsuwilluhaveutouwait.uThi
susituationugetsuworseuanduworseuandubyu6pmu(lastuclientuarrives),uweuareushortu25,000ugallons.
(a) 1pm
(b) Clientsuwillustopuwaitinguwhenuweuhaveuworkeduoffuouru25,000ugallonubackloguthatuweuareuf
acinguatu6pm.uSinceuweuareudoinguthisuatuaurateuofu5,000ugallonuperuhour,uclientsuwillustopuwa
itinguatu11pmu(afteru5umoreuhours).
(c) Atu6pm,uweuhaveuaubackloguofu25,000ugallons,uwhichuisuequivalentutou20utrucks
(d) Theuwaitingutimeuisutheuareauinutheutriangle



©uMcGrawuHilluLLC.uAllurightsureserved.uNoureproductionuorudistributionuwithoututheuprioruwrittenuconsentuofu
McGrawuHilluLLC.