Sampling four pieces of precision-cut wire (to be used in

computer assembly) every hour for the past 24 hours has

produced the following results:
HOUR

3.25"

.71

3.1

1.18

3.22

1.43

3.39

1.26

3.07

1.17

2.86

.32

3.05

.53

2.65

1.13

3.02

.71

10

2.85

1.33

11

2.83

1.17

12

2.97

.4

13

3.11

.85

14

2.83

1.31

15

3.12

1.06

16

2.84

.50

17

2.86

1.43

18

2.74

1.29

HOUR

19

3.41

1.61

20

2.89

1.09

21

2.65

1.08

22

3.28

.46

23

2.94

1.58

24

2.64

.97

Develop appropriate control limits and determine whether

there is any cause for concern in the cutting process.
Let,
Xmean= central line of the chart and the average of past sample means, and A 2=
constant to provide three sigma limits for the process mean
Rmean= average of several past R values and is the central line of the control chart
D3, D2 = constants that provide three standard deviation (three-sigma) limits for a
given sample size
From the provided table we get, Xmean = 15.5375, Rmean = 0.675, n = 5 (as we are
sampling 5 boxes)
Using the table of control chart constraints,
D4 = 2.114, D3 = 0, A2 = 0.577
a.
b.
c.
d.
e.

UCLX= X mean +A2*Rmean = 15.92698

LCLX= Xmean-A2*Rmean = 15.14803
UCLR = D4*Rmean = 1.42695
LCLR = D3*Rmean= 0
First we check the R chart if any observation is out of the limits UCL R and
LCLR. We see that first observation in R chart is out of limits. If any

observation in R chart is out of limit it implies that the process is out of

control.
Additionally, we also check the x chart to see if any observation goes out of
limits UCLX and LCLX. We see that majority of the observations are out of limit.
Thus, the whole process is out of control.

The Bill of materials for a finished product "E', inventory status, and other
relevent information are given below. Compute the planned order releases
and projected on-hand balances for parts E, F, and M.
E
A
B
F
2 required
3 required
2 required
L
M
Part E

20

20

40

Projected On-hand 20

Inventory

20

20

40

40

40

80

Gross Requirements
Scheduled Receipts

Planned Order Releases

Q=50; LT=2; SS=0

Part F
Gross Requirements
Scheduled Receipts

50

Projected On-hand 120

80

130

90

90

10

Inventory

80

130

130

90

10

Planned Order Releases

40

40

80

Q=50; LT=2; SS=20

Part M

Gross Requirements

40

40

80

Scheduled Receipts

60

Projected On-hand 10

30

30

40

Inventory

30

Planned Order Releases

40

40

80

Q=60; LT=1; SS=30

gross reqmnts
scheduled receipts
projected
available
net reqmnts
planned order
receipts
planned order
releases
gross reqmnts
scheduled receipts
projected
available
net reqmnts
planned order
receipts
planned order
releases
gross reqmnts
scheduled receipts
projected
available
net reqmnts
planned order
receipts
planned order
releases

1
20

2
0

3
0

4
20

5
0

6
40

20

30

30

40

20

10

50
50

120

50

50

40

0
50

40

80

80

80

130

90

90

60

0
50

50

10

40
60

40

80

30

30

30

50

50

30

60

10

30

60

60
60

The solution is as below followed by explanation:

Explanation is as follows:
For part E,
Given, lot size = 50, Lead time = 2 periods, Safety stock = 0

Thus, Projected available in period n = Projected available in period n-1 +

(Scheduled receipts + Planned order receipts) for period n Gross
requirement of period n
Or, Projected available in period 1 = Projected available in period 0 +
(Scheduled receipts + Planned order receipts) for period 1 Gross
requirement of period 1
Or, Projected available in period 1 = 20 20 = 0
Now in period 4, as gross requirement is 20 and projected available in period
3 is 0, thus net requirement in period 4 = 20. Thus, we have a planned order
receipt of 50 units in period 2 as lead time is 2.
Hence, Projected available in period 4 = Projected available in period 3 +
(Scheduled receipts + Planned order receipts) for period 4 Gross
requirement of period 4
Projected available in period 4 = 0+0+50-20 = 30
Similarly, we calculate other numbers for product E
Simple tip: if there is a net requirement number, then there should be a
planned receipt for that period and thus there should be planned order release
considering the lead time.
For product F,
Given, lot size = 50, Lead time = 2 periods, Safety stock = 20
Thus, in this case we have to ensure that projected available never goes
below 20 units.
Here, in period 6, we see that the projected available in period 5 = 90, gross
requirement in period 6 = 80. Thus, if we were to satisfy the gross requirement
from the projected available in period 5, our projected available in period 6
would be 10 units which is below the safety stock. Hence, we have to order a
quantity of 50 units in period 4.

Thus, Projected available in period 6 = Projected available in period 5 +

(Scheduled receipts + Planned order receipts) for period 6 Gross
requirement of period 6
Projected available in period 6 = 90+50-80 = 60 (>safety stock)
For product M, all values are calculated in a similar way.

On October 10, 2015 you could buy Colombian Pesos for 1$ = 2806
On August 13, 2015 the rate was $1 = 2762
On September 1, 2015 the rate was $1 = 3200 pesos [these were the actual
rates]
Assuming you have a time machine and a million dollars to play with. What
would you do? How much money could you make?
Assume banks are open on Columbus Day in the US.

The solution to the above problem is as below:

Assumptions: Time machine can go back and forth in time infinite number of
times.
The peso is weakest on September 1, 2015 and strongest on August 13,
2015. The ideal steps to make maximum amount of money would be:
1. Go to September 1, 2015 and buy pesos with the million dollars
2. Go to August 13, 2015 and buy dollars from the pesos
3. Again go to September 1, 2015 and buy pesos with the million dollars
4. Go to August 13, 2015 and buy dollars from the pesos

5. Repeat the steps as above to form an infinite series.

Calculations:Step 1: $1 = 3200 pesos
Thus, $1,000,000 = 3,200,000,000 pesos = 3.2Billion pesos
Step 2: 2762 pesos = $1
3.2 B pesos = $1,158,580.7
Step 3: $1 = 3200 pesos
$1,158,581 = 3,707,458,364 pesos
Step 4: 2762 pesos = $1
3,707,458,364 pesos = $1342309.328
So, the gains are as follows:
Gains = $158580.7 + $183728.5892+.
This is an infinite Geometric progression series with
r = (183728.5892/158581)
Or, r = 1.158580739
For an infinite geometric series, gain = modulus [First value/(1 r)]
= modulus[158580.7/(1- 1.158580739)]
= modulus [-1000000]
= $1000000
Thus, gain would be $1,000,000

The demand of the winter jacket varies over the week (7 days). The
average demand per week is 50 items. Given that the retailers order
lead time is two days, the average lead time demand is 16 items and the
standard deviation during lead time is 3 items. Acceptable stock-out risk
during is considered 4% (96% service level).
[Hints: for 95% service level, z = 1.64, you need to find Z value for 96%
service level]
What amount of safety stock is appropriate?
When should this item be reordered (ROP)?
Assuming the retailers order interval is one week and lead time is same
as two days. The average on-hand inventory is five items at the end of
each week.
[Hints: You will need to determine the standard deviation for the time
period between order placement (i.e., one week) using the standard
deviation for lead time period.]
Determine the order quantities using fixed order interval model
Determine the reorder point (ROP) using variable demand model

Z value for 96% service level from service level and Z value table is 1.751
Safety stock = z*Std. dev = 1.751*3 = 5.253 = 5 items
ROP = Demand during lead time + Safety stock = 16+5 = 21 items