Question

Mama’s Eggs
A complimentary case study for chapter 11, Operations and Supply Chain Management, Bozarth et al….
Mama was well known around town and was even better known for her cooking. She had opened her restaurant 6 years ago and it was THE place to go for the best homecooked food in town. Mama had a kindness that could be found in all her foods.
Mama was busy. She not only owned the business, but was head cook and the host all at once. She was up at 5am and by 6am the restaurant was open. Her hearty breakfasts were legend, but of course that was just the beginning. She also had the lunch and dinner rush to deal it.
The all-day breakfast was quite popular especially amongst the local early risers, including the truckers and floor workers at the auto plant. Her number one food input was the egg (Mama would say her eggs are an “art” of all her recipes). She had a local supply contract with a nearby egg farm, and she picked up eggs at 72 (6 dozen) at a time. The egg supply farm was a pretty large operation and had to supply bulk quantities, so the minimum order increment was always 6 dozen eggs.
One September, Mama was planning her month. She would go to the egg farm every Saturday and pick up her eggs for the coming week. She had established that she would use about 600 eggs per week. Also for September, the town labour day parade came right by the restaurant, and this always lead to an increase in demand.
Further, Mama had heard the that the local union may be planning a wildcat labour intervention if talks with a local factory didn’t go well. She knew what this meant; a picket line filled with hungry men and women, all potential customers.
She was comfortable with seeing her egg inventory run down, but by Friday she would be around 12 dozen left with her busiest day in front of her. She had never run out of eggs except that one time. But she prefers no to talk about it. Even customers dare not bring it up.
Although the farm has offered to deliver her eggs, Mama prefers to pick them up. Still on occasion she has used this service although it takes two days for them to place an order and for her to take delivery. She finds these two days could cut into her remaining egg inventory.
Her grandson is interested in her business and wants to help. As a recent graduate of an Operations course, he feels he can support Mama with her inventory management. The first thing he does is implement an accurate measurement of food used on a weekly basis. He finds that eggs are used as per the following. However, this is from Mama’s memory, as she does not track all her weekly usage.
Week Eggs Consumed
1 585
2 620
3 560
4 620
5 606
6 590
Questions
1) What types of inventory is Mama facing this September? Make sure you provide the definition of the types of inventory and justify your answer based on the hints given in the case study.
2) What does the 6 dozen, order increment do to impact Mama’s ordering practises? What motivates Mama to order from this supplier?
3) What type of inventory back up can the store use to supplement their inventory. How can Mama improve her inventory practices and offer more accurate data to her grandson?
4) Her grandson asks Mama if it would be ok to run out of eggs 10% of the time. “No way!” She cried. “I never run out of food. That it be a sin!” He then suggests a 1% likelihood of running out, and Mama agrees with this service level. What are, the equivalent Z-scores for these two service levels?
5) Given Mama’s eggs sales in the past, calculate the restocking point.
     What would the restocking points be if the service level was based on the service levels as per Q#4
6) What are the implications of these two restocking points?
    To calculate standard deviation, use the formula from text
7) With a service level of 2.33, if the restaurant had 100 eggs left over, what would the order for eggs be
8) If the weekly egg usage was exactly 576 eggs that were consumed every week, using the Restocking formula, what would the safety stock requirement be? Why?

Answer 1

Generally, inventories are classified into two types such as direct and indirect inventories out of that many inventories sub-parts are classified such as product inventory, work-in-progress inventory, finished goods inventory, MRO inventory, miscellaneous inventory, transportation inventory, decoupling inventory, buffer inventory, seasonal inventory buffer inventory, and lot size inventory.

part 1

Cycle inventory is the type of inventory that a seller usually sells in order to satisfy the daily orders. it is also known as on-hand inventory and that he has on his hands to do daily sales. It is also calculated as where a small subset of inventory, in a specific location, is counted on a particular day.

Part2 :

The relationship and the chances of providing the stock when in need would probably increment the impact on mama ordering practices. The trustworthy ness and all such other things plays a vital role in this type of activities.

Part 3:

The best way to determine the same is to forecast accurately. In absence of such a forecast, then historical figures can be used as a proxy, being careful to take any seasonality, product lifecycle factors, or upcoming trends into consideration. And mama can do any of these types of activities and provide the same to grandson.

Part 4 :

Z scores are divided into three types such as a percentage chance of an event happening beyond a certain level, at below a certain level and at between two points.

so z point is = data point-mean/ standard deviation.