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THE WORK MUST BE ACCOMPANIED BY A WORD AND EXCEL FILE. THE WORD FILE MUST NOT EXCEED 2.500 WORDS.
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MASTER’S DEGREE PROGRAMME IN SUPPLY CHAIN MANAGEMENT
Module: Logistics Systems (SCM02)
Academic Year: 2023-24
Written Activity (WA)
Due Date: January 2, 2024
Question 1 (3 points)
The demand for spring water at the WalMart supermarket is 600 litres per week. The setup
cost for placing an order to replenish inventory is 25 €. The water loses its freshness while
stored and therefore to account for this, WalMart calculated an annual holding cost of 2.6
€/liter. Determine the following quantities assuming that a year has 52 weeks.
a. What size each order should be? (0.5 point)
b. How many orders WalMart should place in a year? (0.5 point)
c. How much time (in weeks) will elapse between the placement of two consecutive
orders? (0.5 point)
d. Calculate the optimal annual ordering cost. (0.5 point)
e. Calculate the optimal annual total cycle inventory cost without using directly the
formula of the annual inventory holding cost. (0.5 point)
f.
If the lead time of and order is one half of a week, calculate the reorder point. (0.5
point)
Question 2 (3 points)
Management of the OilCO factory needs to determine the production quantity of a chemical
product. The annual requirements of that product are equal to 10,500 barrels of product.
Currently, the fixed cost related to equipment setup time is estimated at 200 €, regardless of
the production quantity. The production rate is equal to 190 barrels in a day. Annual inventory
holding cost is 0,21 €/barrel. It is given that the factory runs 350 days in a year.
a. Calculate the optimal production quantity and the corresponding annual cost. (1
point)
b. Compute the time between the start of two consecutive production runs. (1 point)
c. Compute the time required for one production run to be completed. (1 point)
Question 3 (4 points)
Atlas Expert Systems Co is a retailer of security systems located in Central Greece. One of the
most popular items that the firms sells exhibits stochastic weekly demand that is
approximated by normal distribution with mean and standard deviation equal to 32 and 2.4
units per week, respectively. Acquisition cost is equal to 170 € per unit and the supplier’s leadtime is equal to 6 weeks. The fixed cost of placing an order is estimated at 850 € and the annual
holding cost is equal to 19% of the product’s value. Consider 52 weeks per year.
a. Propose a periodic review system for the aforementioned product, taking into
account that when an inventory cycle ends with a stock-out, the associated cost is
equal to 320 €. (1 point)
b. For the inventory management system proposed in (a) calculate the annual cost. (1
point)
c. Propose a reorder point system for the aforementioned product, taking into account
that in the case of stock out, Atlas offers a 50 € discount to the customers that receive
the product with delay because of the shortage. (1 point)
d. For the inventory management system proposed in (c) calculate the annual cost as
well as the related Fill-Rate. (1 point)
Assignment guidelines
The assignment should be well structured and easy to read.
The assignment should clearly present all aspects and perspectives of the subject area, i.e.:
explain briefly the methods used
provide the formulas used and illustrate their usage
refer to actual case studies or statistics if required
present reasonable argumentation
omit irrelevant material
All questions are compulsory and each question accounts for a percentage of the total
mark. This is clearly marked next to each question.
Please note that no assignment will be acceptable after the due date reported on the first
page of this file, as the electronic submission system automatically locks at 23:59 on the
last day of submission.
You should submit your assignment via http://courses.eap.gr using your username and
password.
You have to submit a text file and a spreadsheet file (e.g. Microsoft Word and Excel files).
Note: The basic file of your assignment is the Word file. Thus, this file should be able to
stand-alone. Therefore all necessary information, formulas, calculation, interpretation
of results and other text must be included in the Word file. The Excel file has to uploaded,
too. Assignments that fail to comply with these requirements will receive a lower mark in
the presentation grade.
Other document formats or read only file formats such as Portable Document Format
(*.pdf) are not acceptable formats for the submission of your assignment.
Please pay attention to the proper naming of your assignment. The file should be named
as follows: Surname-Initial-SMCnumber-ΗLΕ41. For example, if your name is George
Nikolaou, you are sending in your 1st assignment, and you are in ΗΛΕ41 Class, then you
should name your file as follows: Nikolaou-G-SCM02-ΗLΕ41.
Copying is considered cheating and is not acceptable in any form. Copying large parts or
whole paragraphs of text found in any of the sources used for an assignment (printed
books, academic articles, or electronic media of any kind) is totally unacceptable. It is
considered plagiarism and leads to a severe penalty for the student(s) involved. Students
should cite all sources from which they take data, ideas or words, whether quoted directly
or paraphrased.
Good luck!!
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