The assignment consists of 3 exercises, and the marks for each question varies. Printouts provided
with the prose solutions and explanation of the POM-QM solutions must be originals. A maximum of
4 printout pages may be included in the form of POM-QM reports. Students should note that the
material explaining them is more important than the printouts themselves.
This assignment will be marked out of 50 marks but will constitute 30% of the overall marks for the
subject.
Question 1 – Inventory Management
Part A
Riverina Industrial Electronics Distrbutors (RIED) is involved in distributing electronic components to a
range of commercial customers. The average demand for a particular item of inventory is 640 units
per day. The item is sold at a cost of $20.00 a unit from Regional Computing Components. The
holding cost is 20% per unit per year. It has been established that the cost of each order in the
organisation is $200.00 per order. What is the economic order quantity and the total cost for this
policy?
A second supplier, InfoSys Parts, intends to sell this item at a cost that is lower ($19.00 per unit).
But the minimum order quantity for each order is 10,000 units. Should this item be bought from
InfoSys Parts or Regional Computing Components?
(Assume a 5-day working week, and 50 working weeks a year)
(8 marks)
Part B
Explain how such a basic mathematical model used in this question (the EOQ or Quantity Discount
modes) can be altered to make it more realistic to include features of safety stock and re-order
points.
(5 marks)
There are a number of modern inventory control methodologies. However, not many organizations
have adopted them. Explain the reasons that modern inventory control methods and systems are
not in popular usage. Discuss also how organisations can be persuaded to adopt modern inventory
control methodologies.
(5 marks)
Question 2 – Project Management
Part A
Intekma AutoParts (IAP) are planning to expand their factory to cope with the additional demand
for their products and have requested your help as an external consultant. IAP wants to determine
what is involved in the project and how soon it can be completed. They have asked for a plan in
the form of a Gantt Chart and Critical Path Network with relevant activity times, project duration
and identification of the critical path. In the initial planning stages, you have decided that there are
three major components (or sub-projects) in this expansion project – building, processing equipment
and material handling system. After spending a few weeks in scoping the work, you have
established a list of activities according to the three major components. Details of these are as
follows :
BUILDING
A1 Design Building
A2 Ordering of Materials
A3 Construction of Building
PROCESS EQUIPMENT
B1 In house Design of Equipment
B2 Detailed Design by Consultant
B3 Tender Exercise for Equipment
B4 Installation and Commissioning of Equipment
MATERIAL HANDLING SYSTEM
C1 Study of Processing Equipment by Consultant
C2 Design of Material handling Equipment
C3 Purchase of Equipment
C4 Installation and Commissioning
Discussions with contractors and the client have helped you to draw up a table of estimated
durations for the activities and the relationships among them as indicated below.
Write a report on the project plan to senior management of IAP, offering sufficient information for
senior management to review and understand the implications of embarking on such a project.
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