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# Operations Management

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17.(5) One part of a PERT project, installing equipment, will most likely be completed in 10 days. However, if there are no worker absences, the equipment can be installed in 8 days. If the work force happens to catch Bubonic Flu, this years' disease, the installation will take 18 days. What is the expected time (te) for the equipment installation?
A) 10 days
B) 11 days
C) 13 days
D) 15.3 days
E) 12 days

18.(5) A firm desires to control inventory levels so as to minimize the sum of holding and order costs. It costs the firm \$20 to place an order. The firm estimates its yearly inventory carrying costs at 20%. Weekly demand is 100 units, and there are 50 weeks in the work year. The item costs \$10 per unit. The lead-time for the product is 2 weeks. Assume that there are 5 working days per week. The EOQ is:
A) 32
B) 45
C) 145
D) 224
E) 316

19.(4). Using the data of Question 18: If 200 are ordered each time, then what will be the total annual holding cost?
A) \$50
B) \$100
C) \$200
D) \$250
E) \$500

20.(4) Using the data of Question 18: If 200 are ordered each time, how many orders will be placed in a year?
A) 2
B) 5
C) 10
D) 25
E) 50

21.(5) Using the data of Question 18: If 200 are ordered each time, then time between orders (in working days) is
A) 2
B) 5
C) 10
D) 20
E) 25

22.(4) Using the data of Question 18: If 200 are ordered each time, then what will be the total annual order cost?
A) \$50
B) \$100
C) \$200
D) \$250
E) \$500

23.(5) Use the data of Question 18 and assume no safety stock or service level requirement. In order not to run out of stock before the receipt of a new order, at what inventory level should the firm place an order? That is, what is the reorder point equal to?
A) 40
B) 100
C) 200
D) 400
E) 500

#### Solution Preview

(17) (B)
Use the formula: (0+4M+P)/6 = (8+4*10+18)/6 = 11 days

(18) (E)
Use the formula:
EOQ = SQRT(2DS/H)
=> EOQ = ...

#### Solution Summary

The solution does a great job of answering the question. The solution is brief and concise and very easy to follow along. All the steps are clearly shown. It can be easily understood by anyone with a basic understanding of the topic. Overall, an excellent solution.

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