MGB 452Y HW 1

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University of North Carolina, Charlotte *

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MBAD-614

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Industrial Engineering

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Jan 9, 2024

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MGB 452Y HW 1 Due Date: 18 th October 2023 11:59pm 1. A manufacturing company producing medical devices reported $60,000,000 in sales over the last year. At the end of the same year, the company had $20,000,000 worth of inventory of ready-to-ship devices. a. If units in inventory with cost of $1,000 per unit are sold for $2,000 per unit, how fast does the company turn its inventory? b. The company uses a 25 percent per year cost of inventory. That is, for the hypothetical case that one unit of $1,000 would sit exactly one year in inventory, the company charges its operations division a $250 inventory cost. What---in absolute terms ($) ---is the per unit inventory cost for a product that costs $1,000? 2. The following figures are taken from the 2003 financial statements of McDonald’s and Wendy’s. Figures are in million dollars. McDonald’s Wendy’s Inventory $129.4 $54.4 Revenue 17,140.5 3,148.9 Cost of goods sold 11,943.7 1634.6 Gross profit 5,196.8 1514.4 a. In 2003, what were McDonald’s inventory turns? What were Wendy’s inventory turns? b. Suppose it costs both McDonald’s and Wendy’s $3 (COGS) per their value meal offerings, each sold at the same price of $4. Assume that the cost of inventory for both companies is 30 percent a year. Approximately how much does McDonald’s save in inventory cost per value meal compared to that of Wendy’s? You may assume that inventory turns are independent of the price. 3. A donut store is open 8 hours a day and sells two types of donuts – blueberry cake donut and chocolate frosted donut. On average the demand is 80 donuts per day for EACH type. The store has only one machine which makes both types, and once it starts, it produces one donut every 2 minutes for either type. The production alternates between the two types, i.e., a batch of one type is followed by a batch of the other. The setup time is 20 minutes per batch for either type. a. If the batch size is 10 donuts per batch, what is the capacity per day for each type of donut? b. If the batch size is 20 donuts per batch, what is the capacity per day for each type of donut?
c. What is the minimal batch size in order to satisfy demand for both types? d. If the setup time is 8 minutes for either type, and batch size is 20 donuts per batch, what is the capacity per day for each type of donut? 4. Furniture Face Lift refinishes old wood furniture. Their process for refinishing chairs has 8 workers and 4 stations. Each chair starts at the Stripping station, then goes to Priming, then to Painting and finally to Inspection. Where there are multiple workers within a station, each worker works independently on his/her own chair. Assume inventory buffers are allowed between each station and each station has inventory to work on at the beginning of the day. Station Staffing Processing time (hours per chair per worker) Stripping 3 2.5 Priming 2 1.5 Painting 2 1.75 Inspection 1 0.8 a. What is the maximum number of chairs per hour that can be produced? b. Suppose now that each worker is trained to do all tasks and each worker works on a chair from start to finish, i.e., each worker does Stripping, Priming, Painting and Inspection. What is the maximum capacity of the process in chairs per hour? 5. Consider the following assembly line: Department Processing Capacity (units/day) Yield A 2200 input, 1760 output 80% B 1600 input, 1440 output 90% C 1800 output 100% D 1000 input, 800 output 80% E 800 output 100% Three units of output from Department C and one unit from Department D are used to assemble one unit of final product in Department E. Department E can produce at most 800 units of final product per day. Suppose that all defective units produced at any Department will be detected and removed from further processing. a. What is the system capacity? b. Where is the bottleneck? c. What is the utilization of each department when the system operates at its full capacity? B C D E A 3 parts 1 part
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