Help! : Wed Aug 28, 2013 6:27 pm
My niece has belated started doing some business studies homework in prep for going back to school next week and has asked me for help on the following 2 questions with regards to planning and optimising - but I'm stumped if I know!So, I come to the font of all knowledge, The Sin Bin, for some guidance, hints, insights etc to help her out...
Planning exercise 1
Scenario - Significant increase in product demand has led to a stock shortfall in a number of key product lines. The business needs to get to a position whereby all sales volume demands are successfully covered plus an agreed level of stock is then subsequently manufactured and kept maintained by the manufacturing unit.
Supplied information
Product A sells 5000 units per week.
Product B sells 6000 units per week.
Product C sells 7000 units per week.
Product A is made in a batch process where a 500 unit batch takes 3 hours to mix.
Products B&C are manufactured through a metering system so only 15 minutes preparation is required.
The filling line requires 2 operatives and is restricted to 16 hours running Monday to Thursday and 12 hours on Friday. The line can fill at 500 units per hour.
Task – Please devise a production plan strategy to cater for the requirements of the business. Highlight what Stock Levels are required and any other implications/issues the process may cause in regards to the Supply Chain.
Planning exercise 2
To ensure we meet our inventory & cost targets, you are required to reduce stocks of a raw material in a production process to the lowest sensible levels without impacting production targets.
Product is a powder, has a 6 week lead time, and is delivered in 22,000kg lots. Material can be obtained in either 25kg or 500kg bags. A single batch consumes 1800kgs of material and only full bags may be added to the process.
A pallet of 25kg bags (40 per pallet) costs 5% more than the equivalent material in 500kg bags.
Average usage is between 9000kgs and 18,000kgs per week with a peak demand of 36,000kgs per week.
1) Assuming no seasonality, what would you advise to be the optimum stock holding, and what would be your advised ratio of 25 to 500kg bags
2) What could you do to minimise the cost of this inventory to the business?
3) Make suggestions do you have in respect of how the material could be re-ordered?
4) What do you think the KPI’s for this process should be?
Thank you all
