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# Three problems are listed below with instructions. It is preferable that you provide the typed solutions in MS-Word.

However, you can also write the solutions by hand, scan and upload them in one file on Blackboard. Make sure you write legibly. Show all your work and state any assumptions you make to allow for partial credit. However, be concise and right to the point.

Problem 1: Instructions: Read the Mintendo Game Girl case study (below) and answer the three questions at the end of the case. You do not have to develop mathematical models, but you need to develop Excel models to answer these questions. Include answers to the questions in your report MS word report based on the results of your Excel models. Submit one Excel file for this case with multiple spreadsheets for each scenario you investigate. Mintendo Game Case Study It is late June, and Sandra, head of operations at Mintendo, and Bill, head of sales of We "R" Toys, are about to get together to discuss production and marketing plans for the next six months. Mintendo is the manufacturer of the popular Game Girl handheld electronic game that is sold exclusively through We "R" Toys retail stores. The second half ofthe year is critical to Game Girl's success, because a majority of its sales occur during the holiday shopping period. Sandra is worried about the impact that the upcoming holiday surge in demand will have on her production line. Costs to subcontract assembly of the Game Girls are expected to increase, and she has been trying to keep costs down given that her bonus depends on the level of production costs. Bill is worried about competing toy stores gaining share in the handheld electronic game market during theChristmas buying season. He has seen many companies lose their share by failing to keep prices in linewith the performanceof their products. He would like to maximize the Game Girl market share in the handheld electronic game market. Both Sandra and Bill's teams produce a joint forecast of demand over the next six months, as shown in Table 9-17.
TABLE 9-17 Demand for Game Girls Month July August September October November December Demand Forcast 100,000 110,000 130,000 180,000 250,000 300,000

We "R" Toys sells Game Girls for \$50 apiece. At the end of June, the company has an inventory of 50,000 Game Girls. Capacity of the production facility is set purely by the number of workers assembling the Game Girls. At the end of June, the company has a workforce of 300 employees, each of whom works eight hours of nonovertime at \$15/hour for 20 days each month. Work rules require that no employee work more than 40 hours of overtime per month. The various costs are shown in Table 9-18.
TABLE 9-18 Cost for Mintendo/We "R" Toys Cost \$12/unit \$4/unit/month \$10/unit/month \$3,000/worker \$5,000/worker 0.25/unit \$15/hour \$22.50/hour \$18/hour

Item Material Cost Inventory Holding Cost Marginal Cost of a Stockout Hiring and Training Cost Layoff Cost Labor Hours Required Regular-time Cost Overtime Cost Cost of Subcontracting

Sandra, concerned about controlling costs during the periods of surging demand over the holidays, proposes to Bill that the price be lowered by \$5 for the month of September. This would likely increase September's demand by 50 percent due to new customers being attracted to Game Girl. Additionally, 30 percent of each of the following two months of demand would occur in September as forward buys. She believes strongly that this leveling of demand will help the company. Bill counters with the idea of offering the same promotion in November, during the heart of the buying season. In this case, the promotion increases November's demand by 50 percent due to new customers being attracted to Game Girl. Additionally, 30 percent of December's demand would occur in November as forward buying. Bill wants to increase revenue and sees no better way to do this than to offer a promotion during the peak season. Questions 1. Which option delivers the maximum profit for the supply chain: Sandra's plan, Bill's plan, or no promotion plan at all? 2. How does the answer change if a discount of \$10 must be given to reach the same level of impact that the \$5 discount received? 3. Suppose Sandra's fears about increasing outsourcingcosts come to fruition and the cost rises to \$22/unit forsubcontracting. Does this change the decision when the discount is \$5.

Problem 2 Solve problem 2 (below). Solve this problem manually (not using Excel) and show your work inyour MS word report answering parts (a) and (b). The Orange Company has introduced a new music device 'called the J-Pod. The J-Pod is sold through Good Buy, a major electronics retailer. Good Buy has estimated that demand for the JPod will depend on the final retail price p according to the demand curve: Demand D = 2,000,000 - 2,000p The production cost for Orange is \$100 per J-Pod A) What wholesale price should Orange charge for the I-Pod? At this wholesale price, what retail price should Good Buy set? What are the profits for Orange and Good Buy at equilibrium? B) If Orange decides to discount the wholesale price by \$40, how much of a discount should Good Buy offer to customers if it wants to maximize its own profits? What fraction of the discount offered by Orange does Good Buy pass along to the customer?

Problem 3 Winters model was used to forecast the demand in the table below. Answer the following questions manually and provide the formulas you use (in the MS word report). No Excel spreadsheet is required; just perform manual calculations and assume that all smoothing factors are 0.1 and the periodicity is 12: A)Find the values of X1, X2, , X9 in the table below and show your calculations including the formulas you used to obtain the answers. B) What conclusions can you make from the Bias values of this forecasting model (your answer should specifically be based on the data in the tablebelow)

Period 1 2 3 4 5 6 7 8 9 10 11 12 13

Actual Demand 387 362 402 394 453 491 462 518 391 343 624 586

Level 445 448 449 450 448 448 448 448 447 450 450 448 X1

Trend 0.37 0.67 0.7 0.77 0.45 0.4 0.35 0.36 0.18 0.47 0.4 0.21 X2

Seasonal Factor Forecast 0.82 0.8 0.88 0.94 1.02 1.11 1.03 1.2 0.82 0.77 1.45 1.26 X8 362.88 359.57 395.79 423.74 458.1 496.95 460.25 539.56 367.55 348.27 650.98 X3 X9

Et -24.12 -2.43 -6.21 29.74 5.1 5.95 -1.75 21.56 -23.45 5.27 26.98 X4

At 24.12 2.43 6.21 29.74 5.1 5.95 1.75 21.56 23.45 5.27 26.98 X5

bias -24.12 -26.55 -32.76 -3.02 2.08 8.04 6.29 27.85 4.4 9.67 36.65 X6

MAD 24.12 13.28 10.92 15.63 13.52 12.26 10.76 12.11 13.37 12.56 13.87 X7