11 Aug A team of recent NKU graduates developed a new product in their capstone courses
**9. A team of recent NKU graduates developed a new product in their capstone courses. Their market research shows that the product will fit in the market very well. They identified four ways to bring the product to the market; in-house production, outsourcing some operations to a local company (Norse Machining), importing from Mexico or China.
The fixed and variable costs for each of these alternatives are shown below.
| Import from China | In-house production in Covington, KY | Import from Mexico |
Outsource to Norse Machining |
|
| Fixed Cost | $50,000 | $350,000 | $100,000 | $0 |
| Variable Cost | $30 | $10 | $22 | $24 |
- You may create a graph showing the approximate ranges of demand for all decision points. If you are using a graph to find the approximate ranges, embed image of the graph into your response here.
- You can find the ranges by finding the demand values where the total cost of each pair of options are equal to each other, such as Total Cost China = Total Cost Mexico, and so on.
IN EITHER CASE, YOU MUST SHOW YOUR WORK IN EXCEL TO GET CREDIT.
Find the demand ranges that these options are ideal for this initiative.
Your answer must be in the following format:
China is the best option if the demand is between ______ and __________ units.
In-house production is the best option if the demand is between ______ and __________ units.
Mexico is the best option if the demand is between ______ and __________ units.
Norse Machining the best option if the demand is between ______ and __________ units.
If an option is not ideal in any demand range, type NONE to that option.
18. Three NKU SCM students want to open a new business using Amazon platform.
After making a detailed need and market analysis, they came up with 4 different scenarios. The costs, revenues, and likelihoods of each level of demand are shown in the table below.
| Demand | Total Revenue | Total Expenses | Probability |
| Low | $8,000 | $40,000 | 0.2 |
| Medium | $75,000 | $48,000 | 0.4 |
| High | $125,000 | $65,000 | 0.3 |
| Very high | $200,000 | $85,000 | 0.2 |
What is the expected profit for this venture?
(You must show your work here or in the Excel file for credit)
19. The Nordic Apparel sells 5,000 pairs of bamboo socks every week with a standard deviation of 360 pairs of socks/week. They work with a supplier in Philippines, and the lead time is 9 weeks once the order is emailed to this supplier. The holding cost is $4 per pair. Nordic operates 50 weeks/year.
Joey, the manager for the Socks division at Nordic, calculates the ordering cost as $100 regardless of order quantity. Nordic’s target service level for this popular type of socks is 95%.
Joey orders once a year, but believes that the total inventory costs (ordering and holding) are too high for this particular type of socks. He remembers he learned how to optimize inventory costs in one of his classes at NKU. Fortunately, he still keeps his textbook and revisits the inventory chapter to crunch some numbers. He decided to use Continuous Review system for this critical product since he does not want to lose his loyal customers.
(You must show your work for credit here. Clearly indicate which part of the question you are responding to.)
- What is the total cost if Joey keeps ordering at their current policy?
- What is the optimal order quantity (EOQ) for this product?
- What is the total cost if Joey orders at their optimal order quantity (EOQ)?
- What is the safety stock amount?
- What is the reorder point for the target service level?
20. HNM is a PPE provider serving to hospitals and other healthcare facilities in Greater Cincinnati region.
Using the information provided in the tables below, calculate
- labor productivity for 2020 and for 2021 separately in correct units. Interpret these numbers.
- overall productivity for 2020 and for 2021 separately in correct units. Interpret these numbers.
- Percent change in overall productivity from 2020 to 2021. Interpret this number.
(You must show your work here or in EXCEL to get credit. Clearly indicate which part of the question you are responding to.)
|
2020 |
2021 |
||
|
OUTPUTS |
Units |
120,000 |
155,000 |
|
INPUTS |
Direct Labor Costs |
$240,000 |
$300,000 |
|
Energy Cost |
$ 6,000 |
$ 7,000 |
|
|
Raw Material Cost |
$ 45,000 |
$ 62,000 |
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