1.

Mullen’s Magic Shows is developing a forecast for the number of staff

magicians required for the next twelve months. Below is their forecast.

Month Demand Forecast Workdays per month

(Guests)
1 850 26
2 1260 24
3 510 20
4 980 18
5 770 22
6 850 23
7 1050 24
8 1550 21
9 1350 23
10 1000 24
11 970 21
12 680 13

Last year, in a two-month period (46 days) there were 15 magicians working and
1,800 guests were entertained. This year, there are 10 magicians at the start of
the year.

a) What is the constant minimum number of magicians required to meet monthly

demand?
b) For part b) magicians can be hired for three months minimum and then can
be terminated at no cost. Assume magicians make $100 per scheduled workday
plus $150 per show. Magicians who are hired but do not work are paid $100 per
workday. What is the monthly cost of magicians?

2. Valles Global Industries is assessing the cost of manufacturing parts for

worldwide use. One particular part is used approximately 2,000,000 per year. It
is produced in batches of 2,000,000. Recently, you have been put in charge of
determining a new strategy and look at batch sizes of 50,000. You determine
that material cost is $1.25, labor cost $1.50 and distribution cost $0.25 per part.
An interest rate of 22% has been established to represent opportunity and
storage costs.

a) What is the cost of the first strategy?

b) What is the optimal EOQ?

c) Suppose your plant can make a maximum of 75,000 parts a week. What is
the optimal size production run?
3. The local student chapter of IISE decides to hold a bake sale on Frenger Mall
in front of Foreman Engineering Complex. The members agree to sell all baked
goods for $2.00 each. They discover through a study that demand is distributed
N (225, 20^2). Each baked good costs $0.25 to buy and sells that day for $2.00.
If they don’t sell all the inventory, each unsold baked good is donated at a
revenue per item of $0.00. They estimate that a lost sale costs them the lost
$1.75 revenue over the $0.25 to get the baked goods.

a) Make a recommendation to this group for an optimal strategy. Then, imagine

they sell items for 20 days. Can they fund a trip to the national conference?
Why or why not?

b) Dr. Sohn offers to buy all unsold baked goods at $.50 per item. How much
can they make in an average month’s 20 day bake sale?

4. Valles Global Industries has an issue with their supply chain for various items
they buy. Recently, they did an analysis of the top 250 items in the thousands of
items they buy. On average, they acquire five items from each of the 50 US
states. Parts are shipped from the vendors to a subassembly plant in Victoria de
Durango, Mexico and then returned to the VGI final assembly plant in Durango,
Colorado. Their MSIE and MBA graduates who work in supply chain
management blame the design staff for constantly changing the design of the
products. It has gotten fairly ugly in the conference room and Zoom meetings of
late and you have been called in to settle things and get VGI back on schedule.
Assume you have discovered that change management is not the issue and the
situation is the result of vendor management. Recommend a set of potential
actions for VGI. You may use up to three double-spaced pages. Make certain to
cite any research.

Instructions
1) Each part of the problem that requires computation/calculation should
done on a separate Excel sheet in the same workbook and labelled
accordingly.
2) All final answers are to be boldened in the Excel workbook.
3) Create a separate Word document and screenshot your answers if
possible and graphs and answer any follow up questions attached and
labelled accordingly.
4) Ensure all formulae used are quoted in both the word documents and
excel workbook.