Solution Manual for Matching Supply with Demand 5th Edition Cachon – Complete Answer Key (Chapters 2-19)

SOLUTIONV MANUALV FOR
MatchingVSupplyVwithVDemandVAnVIntroductionVtoVOperationsVManagement,V5thVEditionVC
achonVChapterV2-19

ChapterV2
TheVProcessVViewVofVtheVOrganization

Q2.1VDell
TheVfollowingVstepsVreferVdirectlyVtoVExhibitV2.1.
#1:VForV2001,VweVfindVinVDell’sV10-k:V InventoryV=V$400V(inVmillion)
#2:VForV2001,VweVfindVinVDell’sV10-k:V COGSV=V$26,442V(inVmillion)
26,V442$/VyearV
#3:VInventoryVturnsV=V =V66.105VturnsVperVye
arV400$
40%V perV year
#4:VPerVunitVInventoryV cos =V0.605%VperVyear
tV = 66.105 V perV yea
r

Q2.2.VAirline
WeVuseVLittle’sVlawVtoVcomputeVtheVflowVtime,VsinceVweVknowVbothVtheVflowVrate
VasVwellVasVtheVinventoryVlevel:
FlowVTimeV=VInventory/VFlowVRateV=V35Vpassengers/V255VpassengersVperVhourV=V0.137Vhours
=V8.24Vminutes

Q2.3VInventoryVCost
(a) SalesV=V$60,000,000VperVyearV/V$2000VperVunitV=V30,000VunitsVsoldV
perVyearVInventoryV=V$20,000,000V/V$1000VperVunitV=V20,000VunitsVinV
inventory

FlowV TimeV=VInventory/VFlowV RateV=V20,000V/V30,000V perV yearV =V2V/V3VyearV =V8V
monthsVTurnsV=V1/VFlowVTimeV=V1/(2V/V3Vyear)V=V1.5VturnsV perV year

Note:VweVcanValsoVgetVthisVnumberVdirectlyVbyVwriting:V InventoryVturnsV=VCOGSV/VInventory

(b) CostVofVInventory:V 25%VperVyearV/1.5VturnsV=V16.66%.VForVaV $1000V product,Vthi
sVwouldVmakeVanVabsoluteVinventoryVcostVofV $166.66V.

Q2.4.VApparelVRetailing

(a) RevenueVofV $100MVimpliesVCOGSVofV $50MV (becauseVofVtheV100%Vmarkup).
TurnsV =V COGS/VInventoryV =V $50M/V$5MV =V10V.
(b) TheVinventoryVcost,VgivenV10Vturns,VisV 40%/10V=V4%V.VForVaV 30$V item,VtheVi
nventoryVcostVisV 0.4V$30V=V$1.20VperVunitV.

Q2.5.VLaVVilla
(a) FlowV RateV =V InventoryV/VFlowV TimeV =V1200VskiersV/10VdaysV =V120V skiersV perV day
©VMcGrawVHillVLLC.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwritte
nVconsentVofVMcGrawVHillVLLC.

, (b) LastVyear:VonVanyVgivenVday,V10%V(1VofV10)VofVskiersVareVonVtheirVfirstVdayVofVskiing




©VMcGrawVHillVLLC.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwritte
nVconsentVofVMcGrawVHillVLLC.

, ThisVyear:VonVanyVgivenVday,V20%V(1VofV5)VofVskiersVareVonVtheirVfirstVdayVofVskiing

AverageVamountVspentVinVlocalVrestaurantsV(perVskier)
LastVyearV=V0.1$50V+V0.9$30V=V$3
2VThisVyearV=V0.2$50V+V0.8$30V=V
$34
%VchangeV=V($34V−$32)V/V$32V=V6.25%Vincrease


Q2.6.VHighway
WeVlookVatV1VmileVofVhighwayVasVourVprocess.VSinceVtheVspeedVisV60VmilesVperVh
our,VitVtakesVaVcarV1VminuteVtoVtravelVthroughVtheVprocessV(flowVtime).
ThereVareV24VcarsVonV¼VofVaVmile,Vi.e.VthereVareV96VcarsVonVtheV1VmileVstretchV(in
ventory).VInventoryV=VFlowVRateV*VFlowVTime:V96VcarsV=VFlowVRateV*V1Vminute
Thus,VtheVFlowVRateVisV96VcarsVperVminute,VcorrespondingVtoV96*60V=V5760VcarsVperVhour.


Q2.7.VStrohrmannVBaking
TheVbreadVneedsVtoVbeVinVtheVovenVforV12VminutesV(flowVtime).VWeVwantVtoVprodu
ceVatVaVflowVrateVofV4000VbreadsVperVhour,VorV 4000/60V=V66.66V breadsVperVminute
.

InventoryV=VFlowVRateV*VFlowVTime:VInventoryV=V66.66VbreadsVperVminute*V12Vm
inutesVThus,VInventoryV=V800Vbreads,VwhichVisVtheVrequiredVsizeVofVtheVoven.

Q2.8.VMtVKinleyVConsulting

WeVhaveVtheVfollowingVinformationVavailableVfromVtheVquestion:

Level InventoryV(numberVofVconsultantsVat FlowVTimeV(timeVspentVatVthat
thatVlevel) level)
Associate 200 4Vyears
Manager 60 6Vyears
Partner 20 10Vyears

(a) WeVcanVuseVLittle’sVlawVtoVfindVtheVflowVrateVforVassociateVconsultants:VInvento
ryV=VFlowVRateV*VFlowVTime;V200VconsultantsV=VFlowVRateV*V4Vyears;Vthus,Vt
heVflowVrateVisV50VconsultantsVperVyear,VwhichVneedVtoVbeVrecruitedVtoVkeepVth
eVfirmVinVitsVcurrentVsizeV(note:VwhileVthereVareValsoV50VconsultantsVleavingVthe
VassociateVlevel,VthisVsaysVnothingVaboutVhowVmanyVofVthemVareVdismissedVvsVh
owVmanyVofVthemVareVpromotedVtoVManagerVlevel).

(b) WeVcanVperformVaVsimilarVanalysisVatVtheVmanagerVlevel,VwhichVindicatesVthatVt
heVflowVrateVthereVisV10Vconsultants.VInVorderVtoVhaveV10VconsultantsVasVaVflow
VrateVatVtheVmanagerVlevel,VweVneedVtoVpromoteV10VassociatesVtoVmanagerVlevel
V(remember,VtheVfirmVisVnotVrecruitingVtoVtheVhigherVranksVfromVtheVoutside).VH
ence,VeveryVyear,VweVdismissV40VassociatesVandVpromoteV10VassociatesVtoVtheVm
anagerVlevelV(theVoddsVatVthatVlevelVareV20%)
©VMcGrawVHillVLLC.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwritte
nVconsentVofVMcGrawVHillVLLC.

, Now,VconsiderVtheVpartnerVlevel.VTheVflowVrateVthereVisV2VconsultantsVperVyearV(obt
ainedVviaVtheVsameVcalculationsVasVbefore).VThus,VfromVtheV10VmanagerVcasesVweVe
valuateVeveryVyear,V8VareVdismissedVandV2VareVpromotedVtoVpartnerV(theVoddsVatVtha
tVlevelVareVtherebyValsoV20%).

InVorderVtoVfindVtheVoddsVofVaVnewVhireVtoVbecomeVpartner,VweVneedVtoVmultiplyVt
heVpromotionVprobabilities:V0.2*0.2V=V0.04.VThus,VaVnewVhireVhasVaV4%VchanceVofV
makingVitVtoVpartner.


Q2.9.VMajorVUSVRetailers
a. ProductVstaysVonVaverageVforV31.9VdaysVinVCostco’sVinventory
b. CostcoVhasVforVaV$5VproductVanVinventoryVcostVofV$0.1311VwhichVcomparesVtoVa
$0.2049V atVWal-Mart

Q2.10.VMcDonald’s
a. InventoryVturnsVforVMcDonald’sVwereV92.3.VTheyVwereV30.05VforVWendy’s.
b. McDonald’sVhasVperVunitVinventoryVcostsVofV0.32%,VwhichVforVaV3$VmealVabout
$0.00975.VThatVcomparesVtoV0.998%VatVWendy’sVwhereVtheVcostVperVmealVisV $0.0299V.

Q2.11.VBCH
IV=V400Vassociates,VTV=V2Vyears.VRV=VIV/VTV=V400VassociatesV/V2VyrsV=V200VassociatesV/VyrV.

Q2.12.VKroger
TurnsV=VRV/VIV=V76858V/V6244V=12.3




MatchingVSupplyVwithVDemand:VAnVIntroductionVtoVOperationsVManageme
ntV5e
SolutionsVtoVChapterVProblemsVC

hapterV3
UnderstandingVtheVSupplyVProcess:VEvaluatingVProcessVCapacity


Q3.1VProcessVAnalysisVwithVOneVFlowVUnit
(a) CapacityVofVtheVthreeVresourcesVinVunitsVperVhourVareV 602V/10V=12V,V 601/V
6V=10;V603V/16V=11.25V.VTheVbottleneckVisVtheVresourceVwithVtheVlowestVcap
acity,VwhichVisVresourceV2.
(b) TheVprocessVcapacityVisVtheVcapacityVofVtheVbottleneck,VwhichVisV 10Vunits/hrV.
(c) IfV V demandV=V8VunitsV/VhrV,VthenVtheVprocessVisVdemandVconstrainedVandVtheVflowVrateVis
8Vunits/hr
(d) UtilizationV=VFlowVRateV/VCapacityV.VForVtheVthreeVresourcesVtheyVareV 8V/V12V,V 8V/V10V,Vand
8V/11.25V.


©VMcGrawVHillVLLC.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwritte
nVconsentVofVMcGrawVHillVLLC.