Posted: July 15th, 2022

Compare and contrast centralized and decentralized purchasing systems

Compare and contrast centralized and decentralized purchasing systems

The benefits of a centralized purchasing system include be able to manage costs by having a central purchasing person. The cost saving measures including being able to order in bulk, negotiating large contracts from sellers, and to manage inventory so to order the items as needed without overages.

The benefits of a decentralized purchasing can be seen as having managers from many departments having control over their inventory and order for their specific needs. This approach is said to allow management to be more efficient and to save money by only purchasing for the needs of that department.

2. A college bookstore opens a booth and buys back used books during final exam week. From 9 to 12 in the morning students arrive at the rate of 40 per hour. The bookstore employee can service 50 students per hour. What is the average time in minutes that a student will be in the bookstore (system)?

3. Project path A-C-E-J has these activity time estimates in days:

Activity Optimistic Most Likely Pessimistic

A 3 4 5

C 9 12 14

E 12 15 20

J 7 9 9

Compute the expected time or duration for each activity, the variance for each activity, and the expected duration and variance for the path.

4. A pipe company sells plastic pipe to water companies. Historic demand in four different sales classes for the past 40 weeks is shown below:

Sales Units Weeks

5K – 10K 4

11K – 20K 12

21K – 30K 16

31K – 40K 8

If the company wanted to do a Monte Carlo simulation analysis, what would the random number assignments to the sales classes be?

5. What 7 steps should a company plan for in order to successfully convert to a JIT system?

6. Two separate operations are required to complete a product. Use Johnson’s rule to sequence the following six jobs using the given times.

Job Operation 1 Operation 2

A 1.6 hrs. 1.9 hrs.

B 1.3 1.1

C 1.5 1.7

D 1.6 1.4

E 1.5 1.2

F 2.0 1.6

7. Draw a Gantt chart that shows how the following five classes can be scheduled into two classrooms, A and B: Business Development from 9 AM to 11:45 AM; Market Research from 2 PM to 4:45 PM; Operations Management from 8 AM to 10:45 AM; Case Problems from Noon to 2:45 PM; and Managerial Finance from 11 AM to 1:45 PM. Leave a 15 minute period between classes for students to come and go.

8. What is the difference between repair and preventive maintenance?

9. An airline has 20 planes, is short on money, and doesn’t want to spend any more than necessary to keep the planes safely flying. The cost to perform preventive maintenance (PM) on all 20 planes is $16,000. If a plane has a malfunction between PM inspections, it costs an average of $4000 to fix it. The malfunction history on the planes is as follows:

Months between PM Probability of malfunction

One .2

Two .3

Three .5

How often should PM occur to minimize the total expected costs?

10. Which of the following three shipping alternatives would be the most economical for a shipment of 80 boxes if each box has a price of $200 and a holding cost of 30% of the price: overnight at $300, two-day at $260, or 6 day at $180?

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