Part 1: Please discuss one of the following questions:

What kind of queues are you encounter in your everyday life (for example: car wash, ATM, bank, ticket counter, traffic crossing etc.). Which one irritates you the most and how would you fix it?

Think about a concrete process in your organization. How does your organization manage demand fluctuations in this process and how does your organization plan and control the capacity level of this process?

Part 2: Please take a look at the EOQ model mentioned in the textbook and try to find a solution for the following question:

As a result of the planning process the procurement department of a company determines that the annual demand for a specific component is 6435 units. The sales offer from the only supplier for this component is:

34.97 $ per unit if the purchase order quantity is less than 400 units;

26.26 $ per unit if the purchase order quantity is between 400 and 499 units;

18.80 $ per unit if the purchase order quantity is 500 or than 500 units.

Please determine the optimal purchase order quantity and the optimal purchase frequency for the company under the following conditions:

no safety stock needed

constant daily demand for the component during the year

fix ordering cost of 100 $ per order

holding/capital cost of 20 % per unit and year.

 

the lead time is 0 (that means, immediately after you put an order, the material will be added to the inventory).