Question

Question 1: Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 32 gallons of Red Paint every week (for 52 weeks per year, Standard Deviation of the Demand = 4 gallons). They purchase Red Paint from their supplier at a price of $2.00 per gallon.
It takes 1.25 weeks to receive an order from the supplier.
Administrative costs for Ordering paint have been estimated to be $15 per order.
Holding Costs = 20% of the purchase price per gallon per year.
How much Safety Stock should the company hold to have a Service Level of 99.0%?

A.	4 gallons of paint
	B.	91 gallons of paint
	C.	53 gallons of paint
	D.	10 gallons of paint
	E.	298 gallons of paint

Question 2:

Joe's Window Washing is searching for an ideal location to support its Houston customers. It washes windows in three neighborhoods.Plotting the center of each neighborhood on an X-Y Grid yielded the following results:
Neighborhood 1:     X= 5    Y= 4    POPULATION = 10
Neighborhood 2:     X= 6    Y= 3    POPULATION = 20
Neighborhood 3:    X= 1    Y= 2    POPULATION = 30
Using the Weighted Center of Gravity Method, what are the X-Y coordinates for the optimal location?

	A.	X= 0.6667 Y= 0.6667
	B.	X= 4.9444 Y= 3.5972
	C.	X= 11.7778 Y= 8.0556
	D.	X= 3.3333 Y= 2.6667
	E.	X= 4.0000 Y= 3.0000

Answer 1

Question 1:

Given: Weekly sale = d = 32 gallons

Std. deviation = = 4 gallons

Lead Time = LT = 1.25 weeks

Service level = 99%

For 99% service level, Z value = 2.33

Safety stock = Z * * = 2.33 * 4 * = 10.42 units

Hence, Answer = D. 10 gallons of paint

Question 2:

Using Weighted Center of Gravity Method,

X coordinate = where Xi is the X coordinate of ith location and Pi is the corresponding population.

X coordinate = = = 3.3333

Y coordinate =   where Yi is the Y coordinate of ith location and Pi is the corresponding population.

Y coordinate = = = 2.6667

Hence, Answer = D. X= 3.3333 Y= 2.6667

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