# Exam 1 Fall2014 Essay

Submitted By kristinruannn
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MSOR/MKMR/OPMT475: Exam-I

Due: November 6th, 2014

Name (print):___________________________

Note: This is an individual exam!! You should not discuss any aspect of the exam with fellow students, or share any computer input or output files. Receiving or offering help in an exam is against the school’s academic integrity policies – any violation can result in serious consequences. If you need any clarification, feel free to contact me. You can stop by my office or send me an email. You should submit a written report in class and upload all computer data files on blackboard.

In taking this examination, I agree to abide by the honesty and academic integrity values of the Weatherhead School of Management and Case Western Reserve University.

Signature:______________________________

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PROBLEM 1:
A company distributes its product from a distribution center (DC) to five geographically located retail outlets using its own fleet of trucks. The monthly demand for the product (valued at \$35 per unit) at each outlet is as follows:

Avg Demand Std Dev Distance from DC (Miles)
Retail Outlet 1 425 65 280
Retail Outlet 2 333 52 310
Retail Outlet 3 276 43 200
Retail Outlet 4 526 83 250
Retail Outlet 5 676 91 340

Each retail outlet uses EOQ policy to order the items from the DC. Once an order is received by the DC, it can supply the retail outlet within 1 week ( Assume 1 month = 4.3 weeks). The ordering cost consists of a fixed cost of \$200 per order (cost of truck and the driver) and a variable cost of \$0.50 per mile travelled. Each retail outlet set their in-stock probability during the order cycle at 95%, The inventory carrying rate for this company is estimated at 24% per year.

(a) Determine the EOQ inventory policy (Order quantity, Safety Stock, Reorder Point) for each retail outlet. What is the average total cost per year?
(b) Determine the EOQ inventory policy (Order quantity, Safety Stock, Reorder Point) if all five retail outlets is jointly replenished? What is the average total cost per year? Table below gives the (symmetric) distance in miles between each pair of locations. Assume demands at retail outlets are independent of each other. (Hint: To compute the least joint ordering cost, you need to first determine the best route the truck should use!)

DC
RO 1
RO 2
RO 3
RO 4
RO 5

DC

280
310
200
250
340

RO 1

210
290
260
200

RO 2

380
200
320

RO 3

300
270

RO 4

250

RO 5

(c) Based on your answer to part (a) and part (b), what strategy should this company follow?

PROBLEM 2:
Regal Metals manufactures steel lavatory partitions for commercial buildings. Once a week, orders are accumulated at the Toledo, Ohio, plant (X = 460, Y = 270) for delivery to construction sites. The firm owns five trucks with hauling capacity of 40,000 lb. each. For a particular week, following deliveries are to be made:

Construction Site
X
Y
Order Size (lbs.)
Milwaukee (M)
220
800
16500
Buffalo (B)
670
860
31500
Detroit (D)
470
790
9000
Cleveland (C )
540
730
3000
Pittsburgh (P)
630
680
18000

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(a) Use Sequential Savings algorithm to design routes for the trucks so as to minimize the total distance travelled. Show details of your process at each iteration.
(b) Derive the routes using the Parallel…