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1 Print Name Possible Actual Problem Points Points Total 100 At N.C. State Univ. the honor system is used. That means that you do your own work, you don t accept help from anybody else, and that you don t give help to anybody else. It also means that you don t allow others to cheat. I know it is archaic, but I believe your word is your bond. There are only two things that you carry with you through your life. One is your education. The other is your word. Both are critical to your ability to advance in life. However, if your word is no good, no amount of education will make up for it. Unfortunately, sometimes there are those who do not understand what is being said here. Do not be one of those people. I have neither given nor received help on this exam. Signature No signature, no grade. 1

2 Warm up question: Is all the homework due before the last day of classes, and must that homework be correct to receive a grade in this class? (Yes) (No) 1. (20pts)Use the following data to build and evaluate three (3) lot size schedules. (5pts)Compare the optimal cost of your schedules. (5 pts) (Bonus 3pts)Get the best (lowest cost) feasible schedule in the class Product, j Set Up Time, S j Cost(T), K j (T) D j /P j (5/T+T/5) (7/T+T/7) (10/T+T/10) (12/T+T/12) (13/T+T/13).1 2

3 2. Don s Derby is producing racecars for an upcoming demolition derby (a car race). Because the demolition derby is so destructive, the cars can only be used for one race. Raw Materials (Parts) cost $5,000 and assembly takes 40hrs. Assembly workers are paid $212 per 8 hour day. The cars are sold to participants for $9,400. There is a fixed cost of $700 to set up a new die-stamping machine to produce the cars. The unsold vehicles after the derby will be disassembled, which takes 32hours/car/person. The owner s many children do this for $2.75 per hour each. The parts are sold for $5,300, and there are $60 in Ebay fees per car and & $20 in shipping fees per car. Each racer that does not get a car vandalizes Don s workshop and causes $1,700 in damage. Historically, demand for these cars is normally distributed with a mean of 25/derby, and a variance of 15. a. (15pts)How many cars should Don make? b. (10pts)What fraction of customers do we expect (on average) will vandalize Don s workshop? 3

4 3. The concession stand at the local stadium is facing financial troubles. It seems they can t find the right amount of Pepsi (in gallons) to stock. Demand for Pepsi is constant at 100 gallons/year. The Pepsi Distributor charges $100 for each delivery of Pepsi. The Distributor charges based on the discount scheme below. Since Pepsi is perishable, there is a carrying charge of 0.2 per month. Quantity (in gallons) per Unit Cost ($) Delivery $ $ $1 a. (15pts)How many gallons should be delivered per delivery? b. (10pts)What is the yearly cost of following the optimal ordering policy? 4

5 4. McDonalds and their box supplier (Dupaco) use a VMI (vendor managed inventory) scheme to control the inventory of bags at the Raleigh (Western Blvd) McDonalds store. This means Dupaco has to control the inventory of bags at McDonalds. McDonalds charges Dupaco $10 every time a customer doesn t get a bag because they are out. It takes Dupaco 3 days to drive their (really big) truck from Wisconsin (where their warehouse is) to the McDonalds store in Raleigh to deliver bags. The truck driver charges $1000 to deliver. McDonalds pays Dupaco $0.5/bag, but it only costs Dupaco $0.01 to make a bag. Though demand is not known with certainty, there is a steady supply of college students coming into the McDonalds. Demand for bags is usually 45/day and follows a normal distribution with a standard deviation of 5. Dupaco internal rate of return (IRR) is set at 20% annually, so that is also their holding cost. Dupaco uses a (Q,r) inventory scheme to control the inventory of bags. a. (15pts)How many bags should Dupaco ship in one shipment? b. (10pts)At what point, in terms of on hand inventory, should Dupaco prepare another order which will arrive in 3 days? 5