WAREHOUSE MANAGEMENT – HOMEWORK 1

Name: Trần Võ Khánh Huyền

ID: IELSIU1865

I. Writing

1.

 Receiving principles:

- Cross-dock “cross-dockable” materials

- Complete all necessary steps for efficient load decomposition and movement at
receiving

- Minimize or eliminate walking by flowing inbound material past workstations

- Balance the use of resources at receiving by scheduling carriers and shifting time-
consuming receipts to off-peak hours.

 Shipping principles

- Minimize product damage

- Select cost and space-effective handling units

- Route onsite drivers through the site and minimize paperwork and time

- Use small-parcel shipping, which will change the design of the shipping and staging area
from the one dedicated to unit loads

2. On-farm management of agricultural in Viet Nam: Both local and major rice varieties
have been selected by farmers. The seed selection and storage procedures is based
on both dedicated and randomized storage.

II. Exercise

1.

Month Sales
1 20
2 21
3 15
4 14
5 13
6 16
7 17
8 18
9 20
 10 20
11 21
12 23
a.

Sales
25

20

15

Sales
10

0
1 2 3 4 5 6 7 8 9 10 11 12

b.

 Naïve method

Month Sales Forecast

1 20 -
2 21 20
3 15 21
4 14 15
5 13 14
6 16 13
7 17 16
8 18 17
9 20 18
10 20 20
11 21 20
12 23 21
1 - 23
∑
 A 3-month moving average

Month Sales MA3

1 20 -
2 21 -
3 15 -
4 14 18.67
 5 13 16.67
6 16 14.00
7 17 14.33
8 18 15.33
9 20 17.00
10 20 18.33
11 21 19.33
12 23 20.33
1 - 21.33
 6-period weighted moving average method WMA6 = ∑

Month Sales WMA6

1 20 -
2 21 -
3 15 -
4 14 -
5 13 -
6 16 -
7 17 15.80
8 18 15.90
9 20 16.20
10 20 17.30
11 21 18.20
12 23 19.40
1 - 20.60
 Exponential smoothing method Ft+1 = Dt + (1 – )Ft ( )

Month Sales F(t)

1 20
2 21
3 15
4 14
5 13
6 16
7 17
8 18
9 20 18
10 20 18.60
11 21 19.02
12 23 19.61
1 - 20.63
 A trend projection

Month Sales xy
 (x) (y)
1 20 20 1
2 21 42 4
3 15 45 9
4 14 56 16
5 13 65 25
6 16 96 36
7 17 119 49
8 18 144 64
9 20 180 81
10 20 200 100
11 21 231 121
12 23 276 144
Total 78 218 1474 650
Compute the components of the linear equation, y = a + bx

∑ ̅̅̅
∑ ̅

̅ ̅

So the linear equation is y = 15.567 + 0.4x

Month (x) Period Sales (y) Linear

1 1 20 15.967
2 2 21 16.367
3 3 15 16.767
4 4 14 17.167
5 5 13 17.567
6 6 16 17.967
7 7 17 18.367
8 8 18 18.767
9 9 20 19.167
10 10 20 19.567
11 11 21 19.967
12 12 23 20.367
1 13 - 20.767

c. We cannot use the 3 month moving average, 6 month weighted moving average,
exponential smoothing and the naive method to estimate March sales because all these
 techniques require using actual February sales. The trend projection technique is the only
one that we can use since it does not require February actual sales.

2.

Year Season
Winter Spring Summer Fall Total
1 73 104 168 74 419
2 65 82 124 52 323
3 89 146 205 98 538
Average 76 111 166 75 427
The seasonal indices can now be calculated as follows:

Average demand for all periods = = 106.75

Seasonal index = = 0.71 (Winter)

= = 1.04 (Spring)

= = 1.56 (Summer)

= = 0.70 (Fall)

Total of seasonal indices = 4.01

3.

a.

Annual $ Cumulative Cumulative Cumulative %

Item Class
usage $ usage % $ usage of items
G2 450000 450000 41.38 10
A
F3 250000 700000 64.37 20
A2 150000 850000 78.16 30
C7 67500 917500 84.37 40 B
D1 60000 977500 89.89 50
B8 48000 1025500 94.30 60
E9 20000 1045500 96.14 70
I5 17500 1063000 97.75 80 C
J8 12500 1075500 98.90 90
H2 12000 1087500 100.00 100
a. Separate the important item from the unimportant item in the company

b. Because the item might be have higher shortage or holding cost, or anticipated
engineering changes, or having delivery problem, or have a quality problems that make the
A2 item into A category.

4.
a. d = 75 pounds/day, 200 days/year => Annual demand D = 75 x 200 = 15000 pounds/year

R = $16/order, H = $3/pound/year

EOQ: √ √

b. Total annual holding cost =

c. Total annual ordering cost =

d. LT = 4 days, , stockout risk = 1% => 99% service level => z = 2.33

OP = DDLT + SS = √ √

e. √ √

f. Annual holding cost of SS =

g. 2% stockout risk => 98% service level => z = 2.05

√ √

 The safety stock holding costs would decrease