A firm is selling two products, chairs and bar stools, each at $50 per unit. Chairs have a variable cost of $25 and bar stools $20 Fixed cost for the firm is
$200 a. if the sales mix is 1:1 one chair sold for every bar stool sold what is the break even point in dollars of sales? units? b. if the sales mix changes to
1:4 one chair sold for every four bar stools sold what is the breakeven point in dollars of sales? in units of chairs and bar stools?
After graduation, you decide to go into a partnership in an office supply store that has existed for a number of years.
Walking through through the store and stockrooms, you find a great discrepancy in service levels.
Some spaces and bins for items are completely empty ; others have supplies that are covered with dust and have obviously
been there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands.
Most of your supplies are purchased from just a few distributors that call on your store once every two weeks.
You choose, as your first item of study, computer printer paper. You examine the sales records and purchase orders and find
that demand for the past 12 months was 5,000 boxes. Using your calculator you sample some days’ demands and estimate
that the standard deviation of daily demand is 10 boxes. You also search out these figures :
– cost per box of paper = $11
– desired service probability = 98%
– store is open every day
– salesperson visits every two weeks
– delivery time following visit is three days
Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on hand?
Draw a sketch of the procurement Importance Matrix and briefly explain the focus/purchasing strategy that should be used for each of the four
category items types.
CASE STUDY 1: ANALYZING CASINO MONEY-HANDLINGPROCESSES
Retrieving money from a slot machine is referred to asthe drop process. The drop process begins with a
securityofficer and the slot drop team leader obtaining the slotcabinet keys from the casino cashier’s cage. Getting thekeys takes about 15 minutes. The slot drop team
consistsof employees from the hard count coin room, security,and accounting. The slot drop leader, under
theobservation of a security officer and a person
fromaccounting, actually removes the drop bucket from theslot machine cabinet. When
the drop bucket is pulledfrom the slot cabinet, a tag with the proper slot maA?¬chinenumber is placed on top of the coins to
identify wherethat bucket came from when the weigh process begins.Retrieving the drop bucket
takes about 10 minutes perslot machine. Once a cart is filled with buckets from 20different slot machines, the
drop team leader andsecurity and accounting people deliver the buckets to thehard
count room. The buckets are securely locked in thehard count room to await the start of the hard countprocess.
Delivering and securing the buckets takes about30 minutes per cart. The hard count
process is performed at a designated timeknown to gaming regulatory authorities. The hard countteam
first tests the weigh scale, which takes
10 minutes. The scale determines the dollar value, by denomination,for set weights of 10 and 25 pounds. These results arecompared to calibration results, calculated when the scale was last serviced, to
determine if a significantvariance exists. If one does exist, the hard countsupervisor
must contact the contractor responsible formaintaining the scale and the controller’s office. If nosignificant variance is found, the weigh process cancontinue.Following the scale check, each drop bucket is emptiedinto the
weigh scale holding hopper. Using informationfrom the identificaA?¬tion tag, the specific slot machinenumber from which the bucket originated is entered
intothe weigh scale computer. The weigh scale computer isprogrammed to convert the weight of coins, bydenomiA?¬nation, into specific dollar values, which arerecorded in the weigh journal along
with the slot machinenumber. This weighing and recording process takes sevenminutes per bucket. Once the scale has weighed
thecontents of the drop bucket, the coins automatically droponto a conveyor belt, which
transports them to wrappingmachines. As the coins are wrapped, the rolls of coinsdrop onto
another conA?¬veyor belt, which takes them to acanning station. Twenty-five silver dollars are wrapped ineach
roll at a rate of 10 rolls per minute.At the canning station, the coin rolls are placed in metalor
plasA?¬tic cans that hold specific dollar amounts basedon coin denominaA?¬tion. The cans are stacked to facilitatecounting the wrapped coins. Silver dollar cans hold$1,000, or 40 rolls, and take five minutes to fill and
stack.When the weigh process is completed, the weigh scalecomputer runs a summary
report totaling the weight by denominaA?¬tion. These totals are recorded on theweigh/wrap verification report, which takes five minutesto produce.When the wrap
portion of the count is completed and allof the
rolled coins have been canned and slacked, theyare manually counted by denomination. These totals arealso
recorded on the weigh/wrap verification report. Thevariance in both dollar amounts and perA?¬centages, foreach denomination, is calculated. Variances that
exA?¬ceedplus or minus 2 percent or are $ 1,000 or greater(whichever is less) must be investigated by
the hardcount supervisor, who writes an explanatory report. If nosignificant variances exist, all members of the hard countteam sign the weigh/wrap
verification report. To completethe hard count process, the casino cashier’s cage is thennotified that
the slot drop is ready to be transferred intocage
accountability. Manually counting and verifying thecounts take on average two minutes per can.In a process
separate from the hard count, a cage cashierperforms an
independent count and verification, bydenomination, of the wrap. If everything balances, themain bank cashier
signs the weigh/wrap verificationreport, accepting the slot drop into cage accountability.
Itis at this point that the actual slot gross gaming revenueis
1) Draw a diagram of the drop process
2) Draw a diagram of the hard count process.
4) What would be the impact of purchasing “electronic” slot machines that do not use coins?
Dunstreet’s Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on hand. How many sheets should you order?
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