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HW2 Spring 2025

The document outlines Homework 2 for BUS 346 Operations Management, due on March 30th. It includes problems on waiting line models, ABC analysis, the newsvendor model for calendar sales, and EOQ & safety stock models for a regional hospital's bandage inventory. Each section requires calculations based on provided data and scenarios to optimize operations management strategies.

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cecilia.ho
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11 views2 pages

HW2 Spring 2025

The document outlines Homework 2 for BUS 346 Operations Management, due on March 30th. It includes problems on waiting line models, ABC analysis, the newsvendor model for calendar sales, and EOQ & safety stock models for a regional hospital's bandage inventory. Each section requires calculations based on provided data and scenarios to optimize operations management strategies.

Uploaded by

cecilia.ho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BUS 346 Operations Management

Homework 2
Due Sunday, March. 30th 11:59 pm

1. (Waiting Line Models) A single public health worker is inoculating children against measles at
a local clinic. An average of 6 children per hour is expected to arrive according to a Poisson
distribution. He serves the children at a rate of 8 per hour. Assume that the service-time
distribution is approximately exponential. Use the Excel “Lec 11 MMk Model” to answer the
following questions.

(a) For the ‘inoculation system’, find:

i) the utilization of the health worker


ii) the average time spent by a child in the system
iii) the average number of children in the system
iv) the average number of children in line
v) the clinic estimates that the waiting cost in line for a children is $20/hour, what
is the total waiting cost per hour?
vi) the average number of children in the system if another health worker is added
to the system (assume only one waiting line in the system) who has the same
service rate as the existing one.

(b) At what rate must children be served in order to reduce the average time spent in the
system to 15 min.?

2. (ABC analysis) Determine an A-B-C classification for these items. Data available in “HW2
Data.xlsx”. (use a theoretical distribution: A 70%, B 20%, C 10%)

3. (Newsvendor Model) The Katie's Card Shop sells calendars with different Colonial pictures
shown for each month. The once-a-year order for each year's calendar arrives in September.
From past experience the September to March demand for the calendars can be

1
approximated by a normal distribution with mean 500 and standard deviation 120. The
calendars cost $1.50 each, and Katie sells them for $3 each.
(a) If Katie throws out all unsold calendars at the end of March (i.e., salvage value is zero),
how many calendars should be ordered?
(b) If Katie reduces the calendar price to $1 at the end of March and can sell all surplus
calendars at this price, how many calendars should be ordered?

4. (EOQ & Safety Stock Model) A Regional Hospital (RH) consumes 500 boxes of bandages per
week at a constant rate. The price of bandages is $70 per box. The cost of processing an
order is $60, and the cost of holding one box for a year is $10.5. The lead-time is 3 days.
(a) How many boxes of bandages should RH order every time (i.e., EOQ)?
(b) Currently, RH orders 900 boxes of bandages every time. If they order based on the results
calculated in (a) above, how much could RH save in the total annual cost?
(c) Suppose that the demand on bandages becomes uncertain which is normally distributed
with mean 500 boxes of bandages per week and a standard deviation of 100 boxes per
week. The purchasing department uses a re-order point system to manage its inventory
of bandages and maintains a service level of 95%. What is the reorder point for the
bandages?

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