OM 305
Dr. Robert Aboolian
Assignment # 5
Problem 1: (5 points) Tina Melkonian’s bakery prepares all its cakes
between 4 a. m. and 6 a. m. so they will be fresh when customers arrive.
Day- old cakes are virtually always sold, but at a 77% discount off the
regular $ 10 price. The cost of baking a cake is $ 4, and demand is estimated
to be normally distributed, with a mean of 25 and a standard deviation of 4.
What is the optimal stocking level?
Problem 2: (30 points) Assume that you are the manager of Assembly, Inc.
You have just received an order for 40 units of an industrial robot, which is
to be delivered at the start of week 7 of your schedule. Using the following
information, determine how many units of subassembly G to order and the
timing of those orders (using MRP method). Assume that subassembly G
must be ordered in multiples of 40 units. Also assume that an extra 20
percent scrap for Robot assembly must be included.
Item Lead Time (weeks) On Hand Components
Robot 2 20 B, G, C(3)
B 1 5 E, F
C 1 10 G(2), H
E 2 4 –
F 1 8 –
G 2 16 –
H 2 10 –
Problem 3: (15 points) Sally’s Silk Screening produces specialty T-Shirts
that are primarily sold at special events. She is trying to decide how many
to produce for an upcoming event. During the event itself, which lasts one
day, Sally can sell T-shirts for $20 apiece. However, when the event ends,
half of the unsold T-shirts are sold $4 apiece. It costs Sally $8 to make a
specialty T-shirt.
a) Using Sally’s estimated demand that follows, how many T-shirts should
she produce for the upcoming event?
b) What is the service level when optimal decision has been made?
Demand Probability
300 0.05
400 0.1
500 0.3
600 0.15
700 0.2
800 0.2