Mathematics
AS 2021 Cass Business School Decision Analysis Quiz Questions

AS 2021

Cass business school

AS

Question Description

I need support with this Probability question so I can learn better.

If you can do, please quickly solve for me.

This is about Decision Analysis for test.


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AS2021 Decision Analysis 2019/20 Test 2 replacement Assignment Answer all three questions. There are 50 marks available Show your working. Answers given without working will be penalised. Question 1 A car accessory shop is planning to stock oil filter units for a new model of car. It is planning to meet a steady demand of 5,000 units a year. To order a batch of oil filter units costs the shop £20 per order in administration costs and £30 per order in delivery costs. The units cost £5 each to buy and the cost of holding one unit for a year is £2. (a) Calculate the economic order quantity. (3 marks) (b) Calculate the time between orders and the number of orders placed each year (assume a working year of 50 weeks). (3 marks) (c) Calculate the annual cost of ordering (3 marks) (d) State what the annual cost of holding stock is when the total inventory (ordering and stockholding) cost is minimised. (2 marks) (e) State four assumptions that are made when deriving the formula for the EOQ. (4 marks) (f) Calculate the optimal order size to minimise the total costs of ordering and delivery, holding stock and purchasing if the supplier offers a discount of ½% for orders of 200 units or more. (3 marks) (g) Calculate the optimal order size to minimise the total costs if the supplier offers a discount of 1% for orders of 1000 units or more. (3 marks) (h) If a company decides to set a minimum buffer stock of 100 units, so that the level of stock falls to this minimum level just as the next delivery is received, find the new optimum order size and the new annual cost of holding stock. (4 marks) Question 2 (a) A supermarket is deciding how to allocate selling space to products. On the basis of past sales performance, it has estimated the potential sales value of each of four product groups in each of 4 locations in the supermarket’s selling space: Sales value (£000) Product Group V W X Y Location A B C D 10 15 17 14 6 18 10 12 12 5 13 13 8 11 16 10 Use the Hungarian method to assign product groups to locations so as to maximise potential sales value. (10 marks) (b) The supermarket now decides to introduce a fifth product group Z, the potential sales value of which it has estimated as follows: Location Sales potential A 14 B 16 C 6 D 12 This means that only three of the product groups V, W, X, Y can now be given space. Revise the assignment of product groups to maximise potential sales value. (10 marks) (c) In making changes to move from one matrix to another when answering parts (a) and (b) above, you may have increased the values of some cells of the matrix while reducing or leaving unchanged most of the other cells. Explain which cells you have increased and why you have done this. (5 marks) ...
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Running head: ANSWERS TO QUESTIONS

Answers to questions:
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1

ANSWERS TO QUESTIONS

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Question 1
Economic order quantity= ((2x annual demand x cost per order)/holding cost per unit per
year)^0.5
EOQ= ((2*5000*(20+30)/2) ^0.5= 500
Number of orders= 5000/500=10
Time between orders= 50/10= 5 weeks
Annual cost of ordering= no. of orders placed in a year x cost per order= 10 orders*(20+30)=
$500
Annual cost of holding stock=Average units × Holding cost per unit= 500/2 * 2= $500
Assumptions made when deriving EOQ
Total units to be consumed during the period is known with certainty.
The total ordering cost remains unchanged throughout the period.
The inventory cost remains unchanged throughout the period.
There are no quantity discounts available.
The whole quantity of ordered inventory is delivered in one batch.
Total inventory cost when order quantity is 500
=Ordering Cost+ h...

Chucks574 (14418)
Rice University

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