Exam MBA604

Spring 2016
All information and data of this exam is entirely fictive.

BeeRUS is a beer distributor that handles the distribution for beer for large retails chains,
however, it also has its own retail outlets, selling beer throughout Florida. BeeRUS is facing a
couple of important business decisions.

1) The Operations Management team needs to determine how to best distribute beer
from its warehouses to its retail outlets, as it recently added 4 new retail outlets,
straining the distribution system. Historic data from the current outlets was collected
for number of bottles sold, traffic patterns close to the retails outlets, population over
21 years as well as the marketing budget of the respective outlet (see input data file).
The respective data for traffic patterns, population over 21 and marketing budget are
also given for the four new locations. This data can be used to find an appropriate
model to predict the expected sales (in number of bottles) at the four new retail
outlets (Note: you need to analyze all three variables and all possible combinations of
all three variables to decide on the best model)
2) Furthermore, the input data file contains information about additional capacity of four
warehouses and estimated transportation costs from each of the warehouses to the
four new locations (the distribution to current outlets is taken care off and therefore
does not need to be considered). Suggest the most economic distribution method that
matches warehouse capacity with predicted retail outlet demand.
3) To alleviate the strained distribution system, BeeRUS is considering the opening of
an additional distribution center. The consideration is for a large (maximum capacity
30,000 bottles), medium (maximum capacity 25,000 bottles) or small (maximum
capacity 20,000 bottles). distribution center. The Operations Management team
estimated that the predicted demand (from part 1) may change depending on the
economic development. At the moment the economy is stagnant. If the economy
improves, the team estimates and increase in sales of 10%, however a decrease in
sales of 20% if the economy deteriorates even more. There is a probability of 50%
that the economy remains as is, while it is 30% likely that it will improve and 20%
likely it will get worse. Beer is sold at an average price of $1.80. The operating costs
of the additional distribution center are estimated to be $0.70 for the large facility,
$0.50 for the medium, and $0.35 for the small facility, respectively (the initial
investment is covered by available funds). Furthermore, a marketing firm has offered
to run a large promotional campaign, which would cost $4000. The firm promises that
the campaign would result in an increase in sale of 14%, regardless of economic
situation.
4) BeeRUS has opened a sports pub. For the opening day, the manager needs to
determine the amount of inventory items to have ready. One such item are chicken
wings. The local supplier offers to send wings in batches of 50 at a cost of $0.15 each.
 The sales price is $5.50 for a plate of 10. If there are no interesting games to watch
while being at the pub, the manager thinks that fewer people will come. In this case,
demand is expected to be normally distributed, with a mean of 140 (wings, i.e. 14
plates) and a standard deviation of 20. However, if there are interesting games, more
people will come, with normally distributed demand (mean 190 and standard
deviation 15. Based on the profile of the teams playing during the next couple of
weeks, the manager thinks that there is a 65% chance that the upcoming games will
attract a crowd. How many wings should the manager order? (total of 23 points)
Note: The problem does not consider unsold wings.
Acknowledgement: This last problem is inspired by N. Balakrishnan, B. Render and
R.M. Stair, Jr.

Important:
Carry 2 decimals for all calculations, except for values for beer bottles, which need to
reported with zero decimals (i.e. integers).
Any simulation you may choose to perform needs to be performed with 5000 runs.
Please remember to always include a concluding sentence for each model you submit,
you will lose points if you do not.
Submit everything in ONE file except in case you run a simulation, which needs to
be submitted in a separate file
Filenames (penalties will be applied to inconclusive filenames):
o MBA604FinalExam_yourname_mainwork or
MAB604FinalExam_yourname_simulation.
Penalties may be applied to chaotic spreadsheets. Please make sure that your work is well
organized and that it is easy to see where you did what. Think of it this way: if you were
to open the file in a few months yourself, you would want to know in first glance what
you actually did.