Assignment#1 MTH601

BC240210520

Question#1:

A product design project consists of 8 activities, each defined by its starting and ending event (node)
from (i) to from (j) along with three-time estimates as given in the table below.

Solution:

Act to tm tp t o + 4 t m +t p (
T E= 2
6 t p −t o
σ 2 ¿ Variance=( )
6
A 2 4 10 (2+4(4)+10/6=4.6 2
((10−2)/6) =1.78
7
B 3 5 9 (3+4(5)+19/6=5.3 2
((9−3)/ 6) =1.00
3
C 1 3 5 (1+4(3)+5/6=3.00 2
((5−1)/ 6) =0.44
D 2 6 12 (2+4(6)+12/6=6.6 2
((12−2)/6) =2.78
7
 E 2 4 8 (2+4(4)+8/6=4.00 2
((8−2)/6) =1.00
F 3 5 11 (3+4(5)+11/6=5.6 2
((11−3)/ 6) =1.78
7
G 4 6 12 (4+4(6)+12/6=6.3 2
((12−4 )/ 6) =1.78
3
H 2 4 6 (2+4(4)+6/6=4.00 2
((6−2)/ 6) =0.44

Expected Project Completion Time = 21.67 time units

A company has a constant demand of 24,000 units per year for one of its products. The cost of placing
each order is Rs. 200, and the holding cost per item is Rs. 2 per month. Assuming there are no
stockouts and that items are replenished instantly upon ordering, calculate the Economic Order
Quantity (EOQ), determine the time between two consecutive orders in months, and find the number
of orders the company should place annually to manage inventory efficiently.

Solution;
  Annual demand D=24,000D = 24,000D=24,000 units/year
 Ordering cost per order S=Rs. 200.
 Holding cost per unit per month H=Rs. 2
So, annual holding cost per unit = H×12=Rs. 24

First we will calculate Economic order quantity

EOQ =
√ 2 DS
H

=
√ 2(2400)(200)
24

= 632.46 ≈ 632 units

Now,we will calculate time between two orders;

EOQ 632
Time between two orders = = = 0.02633 years
D 24000

Convert to months;

0.02633*12 = 0.316 months

≈ 0.32 months(9.5 days)2

D 24000
Now,Number of orders per year = = ≈ 37.97 ≈ 38 orders per year
EOQ 632

Question#3:

A company has a yearly demand of 15,000 units for a particular product. The setup
cost for each order is Rs. 500, and the holding cost is Rs. 2.5 per unit per year. The
shortage cost is Rs. 10 per unit per year, and the production rate is 30,000 units
annually. Based on this information, calculate the Economic Order Quantity and
determine the Maximum Inventory Level to help the company manage its inventory
effectively.

Solution:

 Demand D=15,000 units/years

 Setup cost S=Rs. 500

 Holding cost H=Rs. 2.5 per unit /year

 Production rate P=30,000units/year

First we will calculate Economic order quantity(EOQ)

EOQ =
√ 2 DS C s
. .
P
H C s+ H P−D

√
EOQ = 2 ×15000 × 500 .
2.5
10
.
30,000
10+ 2.5 30000−15000

= √ 6,000,000 ×0.8 ×2

= √ 9,600,000 = 3,098.39
≈ 3,098 units

Now,Maximum inventory level

¿ P−D Cs
I = EOQ. .
P C s+ H

30000−1500 10
= 3098. ..
30000 10+ 2.5

= 3098 . 0.4

=1239.2 ≈ 1239 units

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