Birla Institute of Technology and Science, Pilani II Semester 2012-13

AAOC C312 (Operations Research)

Assignment 2 Max. Marks: 30

Note : All questions should be answered sequentially. Attempt all the questions. Use usual notation and symbols as and when necessary. 1. A company stocks an item that is consumed at rate of 60 units per day. It costs the company Rs 80 each time an order is placed. An inventory unit held in stock for a week will cost Rs 0.42. a) Determine the optimum inventory policy, assuming a lead time of 1 week. b) Determine the optimum number of order per year (based on 365 days per year) 2. From the past experience, it is found that the daily demand (X) of a special flower bouquet at a flower shop has the following frequency distribution Demand 1 2 3 4 5 6 frequency 5 10 15 30 20 20 The selling price and purchase price per unit are Rs. 10 and Rs. 5 respectively. The handling cost and salvage value per unit are Rs. 0.25 and Rs. 2 respectively. Find the daily optimal order size if initial inventory is two bouquets. 3. The demand of commodity is 5000 per day. The delivery rate is 10000 per day. No shortages are allowed. The cost of holding is Re. 1.00 per commodity per day. Freight charges incurred in getting the ordered quantity is Rs. 800.00 per order. The unit purchase cost (in Rs.) is as follows: Q Q1000 1000<Q3000 3000<Q9000 9000<Q18000 18000<Q Cost/ 4000 1000 1500 3000 3500 commodity Determine economic order quantity and the optimal order cycle. 4. The continuous demand of an item during a single period is uniformly distributed over [0, 100]. The costs of purchasing and selling of one item are Rs. 7.00 and Rs. 9.00 respectively. If there is a shortage of an item then shopkeeper loses sales and also a goodwill costing Re. 1 per item. The leftover items are sold at a concession rate of Rs. 6.00 per item. There is setup cost of Rs. 10 per order. If initial inventory is 10 items, then find the general ordering point and optimal ordering policy. 5. The demand of a product is 200 units per week and delivery rate is 800 units per week. If the purchase price is Rs 50 per unit, the ordering cost is Rs 100 per order. Holding cost is Rs 1 per unit per week. Calculate Q*, TCU (Q*) and OOC, assuming no shortage is allowed. 6. Assume that in a single period probabilistic inventory model where the demand occurs instantaneously at the beginning of the period and filled instantaneously, the demand of the item follows Normal distribution with mean 20 and variance 25. The costs of purchasing and selling of one item are Rs. 60 and Rs. 100 respectively. If there is a shortage of an item then shopkeeper loses sales and also a goodwill costing Re. 15 per item. The holding cost for leftover items is Rs. 10 per item. There is no setup cost. If initial inventory is 10 items, find the optimum ordering policy.

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