Solution manual for matching supply with demand an introduction to operations management 5th edition cachon

SOLUTION MANUAL FOR
B B


MatchingBSupplyBwithBDemandBAnBIntroductionBtoBOperationsBManagement,B5thBEditionBCacho
nBChapterB2-19

ChapterB2
TheBProcessBViewBofBtheBOrganization

Q2.1BDell
TheBfollowingBstepsBreferBdirectlyBtoBExhibitB2.1.
#1:BForB2001,BweBfindBinBDell’sB10-k:B InventoryB=B$400B(inBmillion)
#2:BForB2001,BweBfindBinBDell’sB10-k:B COGSB=B$26,442B(inBmillion)
26,B442$/ByearB
#3:BInventoryBturnsBB B66.105BturnsBperByearB40
0$
40%B perB year
#4:BPerBunitBInventoryB costB B0.605%BperByear
 66.105 B per B year




Q2.2.BAirline
WeBuseBLittle’sBlawBtoBcomputeBtheBflowBtime,BsinceBweBknowBbothBtheBflowBrateBasBwe
llBasBtheBinventoryBlevel:
FlowBTimeBBInventory/BFlowBRateBB35Bpassengers/B255BpassengersBperBhourBB0.137Bhours
B8.24Bminutes

Q2.3BInventoryBCost
(a) SalesBB$60,000,000 BperB yearB/B$2000BperBunitB B30,000BunitsBsoldBperB ye
arBInventoryBB$20,000,000B/B$1000BperBunitB B20,000BunitsBinBinventory

FlowBTimeBBInventory/BFlowBRateBB20,000B/B30,000BperB yearBB2B/B3ByearB B8BmonthsBTu
rnsBB1/BFlowBTimeBB1/(2B/B3Byear)BB1.5BturnsB perB year

Note:BweBcanBalsoBgetBthisBnumberBdirectlyBbyBwriting:B InventoryBturnsBBCOGSB/BInventory

(b) CostBofBInventory:B25%BperByearB/1.5BturnsBB16.66%.BForBaB$1000Bproduct,BthisBwouldB
makeBanBabsoluteBinventoryBcostBofB $166.66B.

Q2.4.BApparelBRetailing

(a) RevenueBofB $100MBimpliesBCOGSBofB $50MB (becauseBofBtheB100%Bmarkup).
TurnsBBCOGS/BInventoryBB$50M/B$5MBB10B.
(b) TheBinventoryBcost,B givenB10Bturns,BisB 40%/10BB4%B.BForBaB 30$B item,BtheBinventor
yBcostBisB 0.4B$30BB$1.20BperBunitB.

Q2.5.BLaBVilla
(a) FlowBRateBBInventoryB/BFlowBTimeBB1200BskiersB/10BdaysBB120BskiersB perB day
(b) LastByear:BonBanyBgivenBday,B10%B(1BofB10)BofBskiersBareBonBtheirBfirstBdayBofBskiing

©BMcGrawBHillBLLC.BAllBrightsBreserved.BNoBreproductionBorBdistributionBwithoutBtheBpriorBwrittenBconsent
BofB
McGrawBHillBLLC.

, ThisByear:BonBanyBgivenBday,B20%B(1BofB5)BofBskiersBareBonBtheirBfirstBdayBofBskiing

AverageBamountBspentBinBlocalBrestaurantsB(perBskier)
LastByearBB0.1$50BB0.9$30BB$3
2BThisB yearB B0.2$50BB0.8$30BB$
34
%BchangeBB($34B$32)B/B$32BB6.25%Bincrease


Q2.6.BHighway
WeBlookBatB1BmileBofBhighwayBasBourBprocess.BSinceBtheBspeedBisB60BmilesBperBhour,B
itBtakesBaBcarB1BminuteBtoBtravelBthroughBtheBprocessB(flowBtime).
ThereBareB24BcarsBonB¼BofBaBmile,Bi.e.BthereBareB96BcarsBonBtheB1BmileBstretchB(inventory
).BInventoryB=BFlowBRateB*BFlowBTime:B96BcarsB=BFlowBRateB*B1Bminute
Thus,BtheBFlowBRateBisB96BcarsBperBminute,BcorrespondingBtoB96*60B=B5760BcarsBperBhour.


Q2.7.BStrohrmannBBaking
TheBbreadBneedsBtoBbeBinBtheBovenBforB12BminutesB(flowBtime).BWeBwantBtoBproduceBatB
aBflowBrateBofB4000BbreadsBperBhour,BorB 4000/60B=B66.66B breadsBperBminute.

InventoryB=BFlowBRateB*BFlowBTime:BInventoryB=B66.66BbreadsBperBminute*B12Bminute
sBThus,BInventoryB=B800Bbreads,BwhichBisBtheBrequiredBsizeBofBtheBoven.

Q2.8.BMtBKinleyBConsulting

WeBhaveBtheBfollowingBinformationBavailableBfromBtheBquestion:

Level InventoryB(numberBofBconsultantsBat FlowBTimeB(timeBspentBatBthat
thatBlevel) level)
Associate 200 4Byears
Manager 60 6Byears
Partner 20 10Byears

(a) WeBcanBuseBLittle’sBlawBtoBfindBtheBflowBrateBforBassociateBconsultants:BInventoryB=BF
lowBRateB*BFlowBTime;B200BconsultantsB=BFlowBRateB*B4Byears;Bthus,BtheBflowBrateBisB
50BconsultantsBperByear,BwhichBneedBtoBbeBrecruitedBtoBkeepBtheBfirmBinBitsBcurrentBsiz
eB(note:BwhileBthereBareBalsoB50BconsultantsBleavingBtheBassociateBlevel,BthisBsaysBnoth
ingBaboutBhowBmanyBofBthemBareBdismissedBvsBhowBmanyBofBthemBareBpromotedBtoBM
anagerBlevel).

(b) WeBcanBperformBaBsimilarBanalysisBatBtheBmanagerBlevel,BwhichBindicatesBthatBtheBflo
wBrateBthereBisB10Bconsultants.BInBorderBtoBhaveB10BconsultantsBasBaBflowBrateBatBtheBm
anagerBlevel,BweBneedBtoBpromoteB10BassociatesBtoBmanagerBlevelB(remember,BtheBfir
mBisBnotBrecruitingBtoBtheBhigherBranksBfromBtheBoutside).BHence,BeveryByear,BweBdism
issB40BassociatesBandBpromoteB10BassociatesBtoBtheBmanagerBlevelB(theBoddsBatBthatBlev
elBareB20%)

©BMcGrawBHillBLLC.BAllBrightsBreserved.BNoBreproductionBorBdistributionBwithoutBtheBpriorBwrittenBconsent
BofB
McGrawBHillBLLC.

, Now,BconsiderBtheBpartnerBlevel.BTheBflowBrateBthereBisB2BconsultantsBperByearB(obtainedBv
iaBtheBsameBcalculationsBasBbefore).BThus,BfromBtheB10BmanagerBcasesBweBevaluateBeveryB
year,B8BareBdismissedBandB2BareBpromotedBtoBpartnerB(theBoddsBatBthatBlevelBareBtherebyBals
oB20%).

InBorderBtoBfindBtheBoddsBofBaBnewBhireBtoBbecomeBpartner,BweBneedBtoBmultiplyBtheBpromo
tionBprobabilities:B0.2*0.2B=B0.04.BThus,BaBnewBhireBhasBaB4%BchanceBofBmakingBitBtoBpartn
er.


Q2.9.BMajorBUSBRetailers
a. ProductBstaysBonBaverageBforB31.9BdaysBinBCostco’sBinventory
b. CostcoBhasBforBaB$5BproductBanBinventoryBcostBofB$0.1311BwhichBcomparesBtoBa
$0.2049B atBWal-Mart

Q2.10.BMcDonald’s
a. InventoryBturnsBforBMcDonald’sBwereB92.3.BTheyBwereB30.05BforBWendy’s.
b. McDonald’sBhasBperBunitBinventoryBcostsBofB0.32%,BwhichBforBaB3$BmealBabout
$0.00975.BThatBcomparesBtoB0.998%BatBWendy’sB whereBtheB costBperBmealBisB $0.0299B.

Q2.11.BBCH
IB=B400Bassociates,BTB=B2Byears.B RBBIB/BTBB400BassociatesB/B2ByrsBB200BassociatesB/ByrB.

Q2.12.BKroger
TurnsBBRB/BIBB76858B/B6244B12.3



Matching Supply with Demand: An Introduction to Operations Management5
B B B B B B B B B


e
SolutionsBtoBChapterBProblemsBC

hapterB3
UnderstandingBtheBSupplyBProcess:BEvaluatingBProcessBCapacity


Q3.1BProcessBAnalysisBwithBOneBFlowBUnit
(a) CapacityBofBtheBthreeBresourcesBinBunitsBperBhourBareB602B/10B12B,B601/B6B10;B6
03B/16B11.25B.BTheBbottleneckBisBtheBresourceBwithBtheBlowestBcapacity,BwhichBisB
resourceB2.
(b) TheBprocessBcapacityBisBtheBcapacityBofBtheBbottleneck,BwhichBisB 10Bunits/hrB.
(c) IfB demandBB8BunitsB/BhrB,BthenBtheBprocessBisBdemandBconstrainedBandBtheBflowBrateBis
8Bunits/hr
(d) UtilizationB=BFlowBRateB/BCapacityB.BForBtheBthreeBresourcesBtheyBareB 8B/B12B,B 8B/B10B,Band
8B/11.25B.


©BMcGrawBHillBLLC.BAllBrightsBreserved.BNoBreproductionBorBdistributionBwithoutBtheBpriorBwrittenBconsent
BofB
McGrawBHillBLLC.

, Q3.2BProcessBAnalysisBwithBMultipleBFlowBUnits
a) BottleneckBisBresourceB3BbecauseBitBhasBtheBhighestBimpliedButilizationBofB125%.BTheBde
mandsBperBhourBofBtheBthreeBproductsBareB 40B/B8BB5 , B 50B/B8BB6.25BandB 60B/B8BB7.5.B TheBt
otalBminutesBofBworkBdemandedBperBhourBatBresourceB1BisB5B×B5B+B6.25B*B5B+B7.5B*B5B=
93.75.BTwoBworkersBatBresourceB1BproduceB2B*B60B=B120BminBofBworkBperBhour.BS
oBresourceB1’sButilizationBisB93.75B/120BB0.78.BUtilizationBatBtheBotherBresourcesBa
reBsimilarlyBevaluated.
b) TheBcapacityBofBresourceB3BisB60B/15BB4BunitsBperBhour.BGivenBtheBratioBofBunitsBproduce
dBmustBbeB4BtoB5BtoB6,BtheBprocessBcanBproduceB 4Bunits/BhrB ofBA,B 5BunitsB/BhrBofBBBand
6BunitsB/BhrBofBC.


Q3.3.BCranberry
CranberriesBarriveBatBaBrateBofB150BbarrelsBperBhour.BTheyBgetBprocessedBatBaBrateBofB100Bbarrels
BperBhour.BThus,BinventoryBaccumulates BatBaBrateBofB150-

100B=B50BbarrelsBperBhour.BThisBhappensBwhileBtrucksBarrive,Bi.e.BfromB6amBtoB2pm.BTheBhighes
tBinventoryBlevelBtherebyBisB8h*50BbarrelsBperBhourB=B400Bbarrels.BFromBtheseB400Bbarrels,B200B
barrelsBareBinBtheBbins,BtheBotherB200BbarrelsBareBinBtrucks.
(a) 200Bbarrels
(b) FromB2pmBonwards,BnoBadditionalBcranberriesBareBreceived.BInventoryBgetsBdepletedBatBaBrat
eBofB100BbarrelsBperBhour.BThus,BitBwillBtakeB2hBuntilBtheBinventoryBlevelBhasBdroppedBtoB200B
barrels,BatBwhichBtimeBallBwaitingBcranberriesBcanBbeBstoredBinBtheBbinsB(noBmoreBtruckBwait
ing)
(c) ItBwillBtakeBanotherB2BhoursBuntilBallBtheBbinsBareBempty
(d) SinceBtheBseasonalBworkersBonlyBstartBatB10:00am,BtheBfirstB4BhoursBofBtheBdayBweBaccumulate
B4hoursB*B50barrels BperBhourB=B200Bbarrels. BForBtheBremainingBtimeBthatBweBreceiveBincoming

Bcranberries,BourBprocessingBrateBisBhigherB(125BbarrelsBperBhour).BThus,BinventoryBonlyBaccu

mulatesBatBaBrateBofB25B(150-
125BbarrelsBperBhour).BGivenBthatBthisBhappensBoverB4Bhours,BweBgetBanotherB100BbarrelsBinBin
ventory.BAtB2pm,BweBtherebyBhaveB300BbarrelsBinBinventory.BAfterB2pm,BweBreceiveBnoBfurthe
rBcranberries,ByetBweBinitiallyBprocessBcranberriesBatBaBrateBofB125BbarrelsBperBhour.BThus,BitBo
nlyBtakesB 100BbarrelsB/125Bbarrels/hourB B0.8BhoursBB48Bminutes
untilBallBbinsBareBempty.BFromBthen,BweBneedBanotherB2hBuntilBtheBbinsBareBempty.


Q3.4.BWesternBPennsylvaniaBMilk
WeBstartBtheBdayBwithB25,000BgallonsBofBmilkBinBinventory.BFromB8amBonwards,BweBproduceB5,00
0Bgallons,ByetBweBshipB10,000Bgallons.BThusBinventoryBisBdepletedBatBaBrateBofB5000BgallonsBperBho
ur,BwhichBleavesBusBwithoutBmilkBafterB5BhoursB(atB1pm).BFromBthenBonwards,BclientsBwillBhaveBtoB
wait.BThisBsituationBgetsBworseBandBworseBandBbyB6pmB(lastBclientBarrives),BweBareBshortB25,000Bg
allons.
(a) 1pm
(b) ClientsBwillBstopBwaitingBwhenBweBhaveBworkedBoffBourB25,000BgallonBbacklogBthatBweBar
eBfacingBatB6pm.BSinceBweBareBdoingBthisBatBaBrateBofB5,000BgallonBperBhour,BclientsBwillBst
opBwaitingBatB11pmB(afterB5BmoreBhours).
(c) AtB6pm,BweBhaveBaBbacklogBofB25,000Bgallons,BwhichBisBequivalentBtoB20Btrucks
(d) TheBwaitingBtimeBisBtheBareaBinBtheBtriangle
©BMcGrawBHillBLLC.BAllBrightsBreserved.BNoBreproductionBorBdistributionBwithoutBtheBpriorBwrittenBconsent
BofB
McGrawBHillBLLC.