Suppose that Coca Cola bottling plants are currently experiencing a situation in which capacity exceeds demand

Question
	[8 points] Suppose that Coca Cola bottling plants are currently experiencing a situation in which capacity exceeds demand. List and briefly describe two capacity based and two demand based options for Coca-Cola to address this problem
Capacity 1………………………………………………………………………….….….
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Capacity 2…………………………………………………………………………….…..
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Demand 1………………………………………………………………………………….
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Demand 2 …………………………………………………………………………………
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Gall’s firm has the following supply, demand, cost, and inventory data. Allocate production capacity to meet demand at a minimum cost.
Month Forecast Demand Regular Time
Capacity Overtime Capacity Subcontract
Capacity
February 500 400 80 100
March 650 400 80 100
April 700 500 100 100
May 450 500 100 100
Beginning Inventory (BI) = 200 units, held at zero cost.
Regular Time (RT) cost = $1 per unit.
Overtime (OT) cost =$1.50 per unit.
Subcontract (SC) cost = $2 per unit.
Back-order cost = 50 cents per unit per month.
Holding cost = 20 cents per unit per month.
Find the optimal plan and place it in the diagram on the next page? (12 points) 
?
Requested in Month
Supplied
from February
March
April
May
Unused Capacity
Left Total Capacity Available
# $ # $ # $ # $ 
B. I. 
RT Feb 
OT Feb 
SC Feb 
RT Mar 
OT Mar 
SC Mar 
RT Apr 
OT Apr 
SC Apr 
RT May 
OT May 
SC May 
Demand 




Find the total cost in $s? [3 points]

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[16 points] Consider the following Bill of Materials and MPS for the assembly of Item Cart. 

Part Projected Inventory Units On Hand Lead Time (days) Made of items Lot Size
Cart 0 2 Axle + Box LFL
Axle 10 1 2 Wheels LFL
Box 5 2 Axle + Frame LFL
Wheel 70 3 bought 100
Frame 5 4 bought 20
There are no Scheduled Receipts.
Note: not all items are Lot-for-Lot. (LFL)
MPS: You have received only one order to deliver 15 finished carts from your factory on Day 10. 

Draw the Bill of Materials below (1 point)






Please complete the following Gross Materials Requirements Plan (MRP) tables on the next page. (15 points – 3 per sheet)
Abbreviations
GR = Gross Requirements
POH = Projected On Hand
NR = Net Requirements
POR = Planned Order Requirements
POR = Planned Order Release?
Part Day1 Day2 Day3 Day4 Day5 Day6 Day7 Day8 Day9 Day10
Cart GR 
POH 
NR 
POR 
POR 
Axle GR 
POH 
NR 
POR 
POR 
Box GR 
POH 
NR 
POR 
POR 
Wheel GR 
POH 
NR 
POR 
POR 
Frame GR 
POH 
NR 
POR 
POR 
Huckaby Motor Services, Inc. rebuilds small electrical items such as motors, alternators, and transformers, all using a certain type of copper wire. The firm's demand for this wire is approximately normal, averaging 20 spools per week, with a standard deviation of 6 spools per week. The purchase cost per spool is $24; ordering costs are $25 per order; inventory holding cost is $4.00 per spool per year. Acquisition lead time is four weeks. The company works 50 weeks per year, each week has 5 working days.
What is the EOQ for the spools in units
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What are the safety stock and reorder point if the desired service level is 90%?
Safety Stock = …………………………………………………….………….…
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ROP = ……………………………………………………………………………

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What are the total overall costs for the year?
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What is the company’s annual inventory turnover?
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How would the reorder point change if a higher service level is desired? (
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Why?

Formulae
Inventory for Fixed Quantity Inventory Systems with Continuous Monitoring: 
EOQ = ?((2*D*S)/H) Note: use the same units of time in all equations
Where D is the annual demand, S is the ordering cost per order, and H is the annual holding per unit.
Orders per year = N = D/EOQ;
Time between orders = T = 250/N where there are 250 working days in a year.
Safety Stock (SS) = Z * ?((LT*?_d^2+d^2*?_LT^2))
Where LT is the average lead time, d is the average demand, ?_d^ is the standard deviation of demand, and ?_LT^ is the standard deviation of lead time.
Reorder Point (ROP) = d * LT + SS
Average Inventory level = EOQ/2 + SS
Inventory Turnover = (Annual Demand)/(Average Inventory)
Annual Ordering Cost = N * S
Annual Holding Cost = Average Inventory Level * H
Total Annual Inventory Cost = Annual Ordering Cost + Annual Holding Cost
Total Annual Cost = Annual Ordering Cost + Annual Holding Cost + (Unit purchase cost) * D
Z Factors for Specified Service Levels (% certainty of not running out of inventory):
Service Level Z Factor
50% 0.000
80% 0.842 
85% 1.036 
90% 1.282 
95% 1.645 
99% 2.326