Birla Institute of Technology & Science, Pilani

Work-Integrated Learning Programmes Division

Second Semester 2013-2014

Comprehensive Examination
(EC-3 Regular)

Course No. : ET ZC342

Course Title : MATERIALS MANAGEMENT
Nature of Exam : Open Book
Weightage : 50% No. of Pages =2
Duration : 3 Hours No. of Questions = 10
Date of Exam : 05/04/2014 (FN)
Note:
1. Please follow all the Instructions to Candidates given on the cover page of the answer book.
2. All parts of a question should be answered consecutively. Each answer should start from a fresh page.
3. Assumptions made if any, should be stated clearly at the beginning of your answer.

Q.1. Given the following history for a company, calculate the MAD for the item. If the
company uses a trigger of 4 , determine in which period the forecast should be
reviewed. [5]
Period Forecast Actual Deviation Cumulative Tracking
deviation signal
Q.2. 5 Dra
w
1 100 96
2 100 98
3 100 104
4 100 110
product development cycle and explain terms Reliability, Durability and Maintainability?
[5]

Q.3. A hardware company stocks nuts and bolts and orders them from a local supplier once
every 5 weeks (30 working days). Lead time is 5 days. The company has determined that
the average demand for 12 inch bolts is 150 per week, and it wants to keep a safety stock
of 5 days supply on hand. An order is to be placed this week, and stock on hand is 150
bolts.
(a) What is the target level?
(b) How many 12-inch bolts should be ordered this time? [5]

Q.4. A process costs $200 to set up. The run time is 5 minutes per piece and the run cost is $30
per hour. Determine:
(a) The fixed cost.
(b) The variable cost.
(c) The total cost and unit cost for a lot of 500. [5]

Q.5. If the annual cost of goods sold is $12,000,000 and the average inventory is $2,500,000:
(a) What is the inventory turns ratio?
(b) What would be the reduction in average inventory if, through better materials
management, inventory turns were increased to 10 times per year?

ET ZC342 (EC-3 Regular) Second Semester 2013-2014

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 (c) If the cost of carrying inventory is 20% of the average inventory, what is the annual
savings? [1 + 2
+ 2 = 5]

ET ZC342 (EC-3 Regular) Second Semester 2013-2014 Page 2

Q.6. Suppose a company with a plant located in Toronto is serving a market in the northeastern
United States with many customers located in Boston. If the company ships direct to
customers from the Toronto plant, most shipments will be less than truckload. However, if
it locates a distribution center in Boston, it can ship truckload (TL) to Boston and
distribute by local cartage (LTL) to customers in that area. Whether this is economical or
not depends on the total cost of shipping direct compared with shipping via the
distribution center. Assume the following figures represent the average shipments to the
Boston area:
Plant to customer LTL: $130/cwt.
Plant to distribution center TL: $60/cwt.
Inventory-carrying cost (distribution center): $30/cwt.
Distribution center to customer LTL: $20/cwt.
Is it more economical to establish the distribution center in Boston? If the annual shipped
volume is 10,000 cwt., what will be the annual saving?
The distance between Toronto and Boston is about 1000 miles and an LTL transportation
cost of $0.50 per cwt. per mile; calculate the location of the market boundary between
Toronto and Boston. Assume the product cost at Toronto is $20 per cwt. [5]

Q.7. What information is needed to develop a make-to-stock production plan? [5]

Q.8. What are the responsibilities of a material requirements planner? [5]

Q.9. A work center has the following open and planned orders for week 4. Calculate the total
standard time required (load). [5]

Order Setup time Run time Total time

quantity (hours) (hours/piece) (hours)
Release orders 120 300 1.00 0.10
340 200 2.50 0.30
Planned orders 560 300 3.00 0.25
780 500 2.00 0.15
Total time (standard hours)

Q.10. Explain order release process with help of diagram.

Parent X requires 1 each of component Y and Z. Both Y and Z are processed on work
center 20 which has an available capacity of 80 hours. The setup time for component Y is
2 hour and the run time 0.32 hour per piece. For component Z, setup time is 3 hours and
the run time is 0.22 hour per piece. Calculate the number of Ys and Zs that can be
produced. [2 + 3 = 5]

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ET ZC342 (EC-3 Regular) Second Semester 2013-2014

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