You may not use a calculator on this exam. You are allowed one index card of notes, 3 inches by 5 inches.

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1 ISyE 6335, Quiz #3, 09 November 2016 Time Limit: 45 Minutes Name: This exam contains 8 pages (including this cover page) and 8 problems. Check to see if any pages are missing. Enter all requested information on the top of this page, and put your initials on the top of every page, in case the pages become separated. You may not use a calculator on this exam. You are allowed one index card of notes, 3 inches by 5 inches. To receive credit, your work must be justified, legible, comprehensible and your own. signing your name above you agree to abide by the Georgia Tech honor code. By If you need more space, use the back of the pages; clearly indicate when you have done this. Do not write in the table below. Question: Total Points: Score:

2 ISyE 6335 Quiz #3 - Page 2 of 8 09 November (10 points) Consider the following SKUs, which are candidates for storage in a forward area for picking cases from pallets. Assume it requires on average 1 minute per forward-pick, 2 minutes per reserve-pick, and 3 minutes per restock. SKU Forecast orders Forecast sales (pallets) l i A B (a) (5 points) Which of the SKUS has strongest claim to forward storage? Solution: SKU A because its bang-for-buck is ((2 1)(5) (3)(1)) /1 = 2 minutes per pallet location, while that for SKU B is negative it will lose money if picked from a forward position. (b) (5 points) How inexpensive must restocks be to change your answer? Solution: ((2 1)(5) (x)(1)) /1 < ((2 1)(1000) (x)(350)) /10 or x < 95/ minutes 2. (10 points) Forward area for picking cartons from pallets (a) (6 points) Suppose you were to change the order-picking from pick-to-pallet-jack to pickto-conveyor. Would the value of the forward-pick area increase, decrease, or remain unchanged. Explain. Solution: It would increase because: The rate of picking would increase because there would be no need to stack cases on a pallet. There would be less congestion without pallet jacks and so SKUs would require fewer pallet locations and so more SKUs could be stored forward. Credit given for either of these reasons. (b) (4 points) Consider a SKU that is picked as cartons from pallets, each of which holds 36 cases. Assume forward picks require about 1 minute each, reserve picks about 2 minutes each, and restocks about 3 minutes. What is the threshold order quantity beyond which it is uneconomical to pick this SKU from the forward area? Solution: The point at which the net-benefit vanishes is ( ) (2 1) 36 = 12, 3 so any order for more than 12 cases is more efficient to fill from reserve than from the forward-pick area.

3 ISyE 6335 Quiz #3 - Page 3 of 8 09 November (15 points) Forward pick area for small parts: Choose one of the following to answer each of questions (a) (e) regarding a forward piece-pick area. 1. SKU with greatest bang-for-buck 2. SKU with most picks 3. SKU with greatest value of flow 4. SKU with greatest value of picks per unit of flow 5. SKU with the greatest value of flow per pick 6. SKU with most picks per restock 7. SKU with most picks per volume of allocated space (a) (3 points) Among all SKUs, which has strongest claim to forward storage? Solution: The SKU with the greatest bang-for-buck (b) (3 points) Among the forward SKUs, which will be receive the most space, if allocations are chosen to minimize the number of restocks? Solution: The SKU with the greatest value of flow (c) (3 points) Among the forward SKUs, which will receive the most space, if Equal Time allocations are used? Solution: The SKU with the greatest value of flow (d) (3 points) Among the forward SKUs, which will be restocked most frequently, if allocations are chosen to minimize the number of restocks? Solution: The SKU with the greatest value of flow (e) (3 points) Among the forward SKUs, which will be restocked most frequently, if space is allocated equally? Solution: The SKU with the greatest value of flow

4 ISyE 6335 Quiz #3 - Page 4 of 8 09 November 2016 Forecast Forecast Volume SKU picks sales per piece A B C D Table 1: A set of SKUs competing for forward space 4. (10 points) Forward pick area for small parts. (a) (5 points) Which of the SKUs of Table 1 has the strongest claim to forward storage if the forward area is to be stocked to so that every forward SKU is allocated the same space. (Forecast sales is measured in pieces.) A B C D They all have equally strong claims. It is impossible to tell without more information. Solution: The best answer is that it is impossible to tell, because under equal space allocations the bang-for-buck also depends on the number of SKUs to go forward. If you calculate the bang-for-buck assuming you must choose only one SKU then the answer is C, whose bang-for-buck is (1)(54) (3)(9) = 27. (b) (5 points) Which would provide the greatest value: Slotting the four SKUs above by Equal Space allocations or by Equal Time allocations? Solution: They would provide exactly the same value.

5 ISyE 6335 Quiz #3 - Page 5 of 8 09 November 2016 (a) (b) (c) (d) (e) Figure 1: 5. (15 points) Forward pick area for small parts (a) (5 points) Which among the charts in Figure 1 best depicts the net benefit of adding the most attractive k skus (k = 1... n) to a forward pick area for small parts? Assume that skus are stored in amounts that minimize the expected number of restocks. (You can choose more than one chart.) Solution: Chart (a), which starts at the origin, is unimodal, and eventually becomes negative (b) (5 points) Which charts are typical when the skus are stored in equal space amounts? Solution: Chart (a) again (c) (5 points) Which charts are typical if the skus are stored in amounts so that each sku is expected to be restocked at the same frequency? Solution: Chart (a) again.

6 ISyE 6335 Quiz #3 - Page 6 of 8 09 November (10 points) Why are optimal pick-paths infrequently used? (Choose all that apply.) 1. Because they can be very time-consuming to compute 2. Because they can be complicated and therefore difficult for order-pickers to follow 3. Because they may not be much shorter than simpler paths 4. Because they require a highly precise map of the warehouse 5. Because customers do not care about it Solution: 2 and 3

7 ISyE 6335 Quiz #3 - Page 7 of 8 09 November (25 points) Know your client! (a) (5 points) About how many materials does APM distribute? 1, 10, 100, 1 000, , or ? Solution: About (b) (5 points) How long does it take to pick and consolidate domestic orders? Solution: About two days (c) (5 points) How long does it take to pick and consolidate international orders? Solution: About two weeks (d) (5 points) Which best describes the APM put-away strategy? 1. Put the product in the location closest to manufacturing 2. Put the product in the location closest to shipping 3. Put the product in the most convenient overall location 4. APM does not have a put-away strategy Solution: 4 is probably the most accurate answer, but as a result workers tend to follow 1. Either answer is acceptable. (e) (5 points) Which best describes the APM order-picking strategy? 1. Pick the closest 2. Pick the oldest 3. Pick the soonest to expire 4. Pick from the location that is most nearly empty Solution: 2: Pick the oldest

8 ISyE 6335 Quiz #3 - Page 8 of 8 09 November (5 points) According to Pete... (a) (2 points) According to Theory X, people are a... what? According to Theory Y, people are a... what? Solution: Theory X: Cost. Theory Y: asset. (b) (3 points) Companies are in business to... do what? Solution: Make money