# Suppose the revenue for a firm is $8,000,000. Its cost of goods sold is $500,000, and its average inventory value for the year

Subject: Business / Management

MGMT 3306

Assignment 3 (Due at 11:59 pm April 04 CDT)

Instructions:

1. Please answer the assignment questions in this docx file and save once you’re satisfied. Assignment 3covers the lectures slides on Process Strategy, Location Strategy, and Supply Chain Mgt.

2. There are fiveassignment problems. Please follow the instructions given at the end of each question if any.

3. You can make as many submissions as necessary before the due date/time. Only the last submission will be graded.

Assignment Problems (52points in total):

1. Ski Boards, Inc., wants to enter the market quickly with a new finish on its ski boards. It has two options: (a) Refurbish the old equipment at a cost of $800 and (b) make major modifications at a cost of $1,100. If the firm decides to refurbish the equipment, materials and labor will be $1.10 per board. If it chooses to make modifications, materials and labor will be $0.70 per board.

(a) What is the cross-over point of the two options? Please include the formula, at least one step of calculation, and the correct answer for full credit. (6 points)

(b) Which option should Ski Boards, Inc., choose if the estimated demand is greater than 1,000 boards? And why? (4 points)

2. A company has the following three candidate locations to evaluate:

Criterion Weight Location 1 (rating) Location 2 (rating) Location 3 (Rating)

Labor 0.3 4 4 5

Logistics system 0.2 3 4 3

Price 0.3 4 3 2

Management 0.2 5 4 3

The locations are rated based on a 1-5 scale, with 5 being the most satisfactory.

Which location should the company choose? Please provide the overall ratings of each location for full credit. For each overall rating, please provide at least one step of calculation. (14 points)

3. The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect through a central hub.

City Map coordinates (x, y) Shipping load (in tons)

A (5, 10) 20

B (20, 20) 5

C (15, 10) 15

D (20, 15) 10

Using the Centroid method, at what map coordinates should the central hub be located? Please provide at least one step of calculation for each of the two coordinates of the centroid for full credit. (8 points)

4. Company X can purchase a certain component from either Supplier A or Supplier B. Supplier Aoffers an incremental quantity discount and charges $20 per unit for the first 2,000 units in an order, $18 per unit for the next 2,000 units in the order, and $16 per unit for any unit beyond. Supplier B offers an all-unit discount and charges $20 per unit for orders of no more than 4,000 units and $17 per unit for any bigger orders.

(a) Suppose Company X decides to buy 5,000 units from Supplier A. What is the average unit cost of the order? Please provide at least one step of calculation and the correct answer for full credit. (4 points)

(b) If Company X wants to place an order of 5,000 units, which supplier offers a lower total cost. Please provide at least one step of calculation and the correct answer for full credit. (4 points)

5. Suppose the revenue for a firm is $8,000,000. Its cost of goods sold is $500,000, and its average inventory value for the year is $300,000.

a) What is the firm’s inventory turnover? Please include the formula, at least one step of calculation, and the correct answer for full credit. (6 points)

b) What is the weeks-of-supply of the firm? Please include the formula, at least one step of calculation, and the correct answer for full credit. (6 points)

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