OMEGA Assignment-2

Question 1: An aircraft company has an order to refurbish the interiors of 20 jet aircraft. The work has a
learning curve of 85%. On the basis of experience with similar jobs, the IED estimates that the first plane
will require 250 hours to refurbish. Estimate the amount of time needed to complete:

a) The 5th plane

b) The first 5 planes
c) All 18 planes
Answer 1:
TN= TIME REQUIRED BY THE FIRST UNIT*(NTH UNIT^(LOG0.85/LOG2)

log0.85/log 2=-0.2344
Time required for each
Number of Units unit
1 250
2 212.5096117
3 193.2425619
4 180.6413402
5 171.4357689
6 164.2636072

7 158.4342339
8 153.5520842
9 149.370751
10 145.7269947
11 142.5074481
12 139.6303815
13 137.0350577
14 134.6751901
15 132.5147488
16 130.5251752
17 128.6834754

18 126.9708811
Total Time Required 2851.719312

A) Time required to make the 5th plane= 171.43 hours

B) Time required to make the first five planes = 250+212.50.+193.24+180.64+171.43=1007.81 hours
C) Time required to make all the planes =2851.71 hours

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Question 2: The below table contains the sales data of ABC company for last 12 periods. Estimate the
forecasted sales values for next 3 periods. Select the most suitable forecasting techniques from the ones
discussed in the practice material. You may use any of the error method to select the most suitable
forecasting technique.

Answer 2:

PERIOD(X) ACTUAL SALES(Y) X^2 XY

1 500 1 500
2 350 4 700
3 250 9 750
4 400 16 1600
5 450 25 2250
6 350 36 2100
7 200 49 1400
8 300 64 2400
9 350 81 3150
10 200 100 2000
11 150 121 1650
12 400 144 4800
78 3900 650 23300

Y=a+bX
a 418.18
b -14.33

a= 650*3900-78*23300/12*650-78*78
b=12*23300-78*3900/12*650-78*78

y13 231.89
y14 217.56
y15 203.23

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Question 3: After analysis of all the SKUs, ABC corporations found that there are 3 categories of finished
goods inventory. The following table shows the percentage of total items in each category and their %
value. Determine the order of priority of the inventory using ABC classification

Answer 3:

After analysis of all the SKUs, ABC corporations found that there are 3 categories of finished goods inventory.
The following table shows the percentage of total items in each category and their % value. Determine the order
of priority of the inventory using ABC classification Category Percentage of item Percentage of overall value 1
20-30% 20-30% 2 5-15% 50-65% 3 55-75% 5-30%

CATEGORY 2 is ‘A’ Category because it forms a small percentage of the total items but forms the major
chunk of item value. Hence Category 2 should be the top most be given most priority.

CATEGORY 1 is ‘B’ Category because it has the same percentage of item and item values approximately. It
should be given priority after Category 2 that is A category.

CATEGORY 3 is ‘C’ Category because it forms the major chunk of percentage of items but the least
percentage of value of items. Hence it should be given the least priority.

4.Explain all the costs involved in inventory management in max 1-2 line each. Different costs involved
are mentioned in the knowledge material which can be taken as reference. Use your own words

Ordering Costs-It is the cost incurred when we place an order

Stock Out costs- The cost incurred by the firm if a stock out occurs

Carrying Costs- These are costs incurred while holding inventory or stock in storage or a warehouse.

Question 4: Explain all the costs involved in inventory management in max 1-2 line each. Different costs
involved are mentioned in the knowledge material which can be taken as reference. Use your own words
Answer 4:

• Ordering Costs-It is the cost incurred when we place an order

• Stock Out costs- The cost incurred by the firm if a stock out occurs

• Carrying Costs- These are costs incurred while holding inventory or stock in storage or a warehouse.

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Question 5: Watch this short video https://www.youtube.com/watch?v=5zuyssUMGTc and explain in
brief the learning w.r.t use of IoT in inventory management

Answer 5: For inventory management, IoT can be put to use in the following ways

1. Visualization in the warehouse-

• Indoor Positioning- Being able to capture the Wi-Fi location of the scanners while also capturing the
utilization of the material handling equipment.
• Data around warehouse management systems- The tasks that are actually directed to the users

These sources together bring together the visualization in the warehouse. An operations manager no longer
has to look at data sheets to understand the warehouse and the opportunities. IoT can provide quicker and
more efficient visualization of the whole warehouse thereby adding value.

2. Increasing efficiency around the warehouses- To be able to run the warehouse managing the
inventory better and more safely. IoT can also provide some insights to help make decisions by
aggregating the positioning of the individuals which can lead to “heat-maps”. Heat maps can show the
concentration individuals, track traffic patterns of forklifts and scanners. With such information,
proactive safety measures could be put in place. IoT gives an opportunity to the management to replay
the activities over time and again to analyze the processes thereby trying to find more efficient
alternatives. This comes handy when the size of a facility is huge and an operations manager cannot
have a full overview of the facility. The usage can be analyzed for different periods of time ranging for a
day to a week to a month and so on thus helping in asset utilization and material handling equipment. It
can also provide an opportunity to put the right parts at the right place in the warehouse to reduce the
travel distance in the warehouse.
3. Increasing safety- By using the heat maps, traffic plans can be reviewed to determine if the flow on
inventory is appropriate. Also, incidents can be reviewed so that impacts and collisions in the future can
be avoided as the technology would allow us to see what exactly happened. It can show where
opportunities exist and eventually adjust the warehouse level.

Thus, IoT can change the way companies are running logistics. Digitalization would have a huge impact in all
industries; particularly the way inventory is handled and managed by digitalizing the whole supply chain.

Question 6: Watch this short video https://www.youtube.com/watch?v=VdFx2R6diMk on digital supply

chain and draw key learning from the same.

Answer 6: The omni-channel world is causing companies put innovative technologies to use, new delivery
methods and differentiating practices to enable convenient, predictive and cost effective deliveries to their
customers so that the customers are satisfied by their supply chains.

Customers spend a lot of their time online, be it on social media or just surfing the internet. When a customer
begins to browse online for the required product, the store recognizes the profile and recommends the products
required by the user/customer based on the region and its characteristics. For example, say a potential customer
takes a weekly hiking expedition and requires a rain jacket. The system recommends a rain jacket based on the

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local weather forecast for the mountains for the week. The backend system on the other hand recognizes the
overall seasonal increase in searches for rain jackets thereby adjusting the demand forecast across the reason
hereby ensuring that the increasing demand is met by the rising supply.

Depending on when the customer requires the product, the system looks for products in the distribution centre
locally or in the region. The customer can either pick the product up from the store or get it delivered,
depending on the availability of time with the customer.

In case of order of a product which is out of stock at a local store, a third party can be hired to bring the product
from a nearby store for a few extra bucks to her desired store/location. Artificial intelligence continues to
access the purchase data from different regions. The demand for a particular product is understood by the
number of orders placed by customers in a particular region. The manufacturer can thus be notified with the
press of a button to add more stock of this good in the supply chain to meet the growing demand.

With the growing incidence of technology, the system also recommends for products that are getting over or
need to be refilled, like food, tea, coffee, fuel etc. The system also regularly sends suggestions based on the
items already owned by customers. This in fact leads to increase in the number of purchases made.

The digital way of life also draws out the risks of an impulse purchase. The required size of a particular
product can be set aside at the store and thereafter picked up if it matches the requirement.

The supply chain has moved from being an enabler to a key business process and can destroy a business’s
revenue. Thus, digital supply chain allows a company to bring to the customer what they want and how they
want it and in the most cost effective way possible.