1. Suppose the demand of a product in a retail store is 800 per year and it occurs at a constantrate. Placement of an order of this product to an outside supplier by the store is 40 Dollar.The super market authority has calculated the inventory holding cost per unit per year as90 cents. Assuming no occurrence of shortages of the product, finda)i. the minimal order quantity of the product from the outside supplier if the product isnot allowed to sell during production.ii. the minimal number of orders per year. Explain whether the nearest integer number oforders per year is justified.iii. the cycle time of a lot in months.iv. the annual minimal total cost of ordering and inventory holding for that minimal orderquantity.v. the reorder point if the lead time of delivering a lot is 2 days,?b) If the production rate of processing the product is 1200 per year and the set up cost per setup is 65 Dollar. If the selling of the product is allowed during production, determinei)the economic product quantitythe cycle time of delivering a lot to the retailersthe number of deliveries per yearthe annual minimal total cost of set up and inventory holding for delivering theii)iii)iv)EPQ.

Answered: a) i. the minimal order quantity of the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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14. 12 The purchasing manager for the Atlantic Steel Company must determine a policy for ordering coal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the firm operates 360 days per year. The purchasing manager has determined that the ordering cost is $80 per order and the cost of holding coal is 20% of the average dollar value of inventory held. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton for the coming year. a. Determine the optimal quantity of coal to receive in each order. (Ans: 1200 tons) b. Determine the total inventory-related costs associated with the optimal ordering policy (do not include the cost of the coal). (Ans: TC= $2880) c. If 5 days of lead time are required to receive an order of coal, how much coal should be on hand when an order is placed? (Ans= R=300 tons)
1. Forrest and Dan make boxes of chocolates for which the demand is uncertain. Forrest says, "That's life." On the other hand, Dan believes that some demand patterns exist that could be useful for planning the purchase of sugar, chocolate, and shrimp. Forrest insists on placing a surprise chocolate-covered shrimp in some boxes so that "You never know what you'll get." Quarterly demand (in boxes of chocolates) for the last three years is shown in the table below: b. If the expected sales for chocolates are 14,400 cases for year 4, use the multiplicative seasonal method to prepare a forecast for each quarter of the year. (Round all intermediate calculations to two decimal places.) The first quarter forecast is what? boxes of chocolates. (Enter your response rounded to the nearest whole number.)
At Matthews Car Repair, customer demand for a certain brand of motor oil is normally distributed with a mean of 15 gallons and a standard deviation of 6 work-days. To be 95% sure that Compact Car Repair will not run out of oil, we should reorder when motor oil in stock is less than _______ gallons. a. 24.9 b. 22.6 c. 23.7 d. 20
Problem 20-10 (Algo) You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper for $0.30 a copy. You sell a copy of San Pedro Times for $1.10. Daily demand is distributed normally with mean = 265 and standard deviation = 53. At the end of each morning, any leftover copies are worthless and they go to a recycle bin. a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.) Optimal order quantity b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.) Probability
Given this information:Lead-time demand 600 poundsStandard deviation of lead time demand 52 pounds (Assume normality.)Acceptable stockout risk during lead time 4 percenta. What amount of safety stock is appropriate?b. When should this item be reordered?c. What risk of stockout would result from a decision not to have any safety stock?
#5. Consider a product that is stocked using periodic review inventory policy. Orders are placed every 21 days, and shipment lead time is four days. Daily demand is normally distributed with a mean of 58 and standard deviation of 16; fulfillment policy is at 97%. You have to do the following: (b) If the current stock is 398, and we are about to place an order, how much do we order?.
Green Grass Industries Limited (GGIL) has used a fixed-time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs, are forcing GGIL, to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such a shortage costs. Table 10 is a random sample of 20 GGIL's items. Table 10. Annual Usage by Value of a sample of GGIL's Inventory Item Number Annual Usage ($) Item Number Annual Usage ($) 1 10,600 11 2,750 2 14,000 12 1,400 3 4,000 13 3,200 4 16,000 14 2,500 5 8,100 15 110,000 1,800 16 14,800 7 84,000 17 9,500 8. 890 18 1,700 9 940 19 3,700 10 94,000 20 12,500 a) What would you recommend GGIL to do to cut back its labor cost? (Illustrate using an ABC plan). b) Item 18 is critical to continued operations at GGIL. i. How would you recommend it be classified? ii. Give the reason(s) for your answer.
Torrance Refinery produces approximately 23.1 Million barrels of gasoline per year. A California distributor sources its gasoline from the Torrance refinery. The annual demand for gasoline at the California distributor is 5.3 Million barrels. The cost of storing gasoline is approximately $29 per barrel (per year). The cost of placing an order to the Torrance refinery (including shipping) is $7300 per order. Orders will be received gradually instead of delivered all at once (hence EPQ). At what quantity will the total cost of procurement be the lowest? Round your answer to the nearest whole number. Do NOT include a comma. For example, answer like 103542 and NOT 103,542 Answer: 58845 Check
Problem 20-10 (Algo) You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day’s paper for $0.50 a copy. You sell a copy of San Pedro Times for $1.25. Daily demand is distributed normally with mean = 335 and standard deviation = 67. At the end of each morning, any leftover copies are worthless and they go to a recycle bin. a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.) b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.)
6. Leaky Pipe, a local retailer of plumbing supplies, faces demand for one of its SKUs at a constant rate of 17,000 units per year. It costs Leaky Pipe $5 to process an order to replenish stock and $2.00 per unit per year to carry the item in stock. Stock is received 12 working days after an order is placed. No backordering is allowed. Assume 365 working days a year. d. The demand during lead time is _____ units. (Enter your response rounded to the nearest whole number.) e. The reorder point is ______ units. (Enter your response rounded to the nearest whole number.) f. The inventory position immediately after an order has been placed is _____ units. (Enter your response rounded to the nearest whole number.)
4. A beer store uses a (Q, R) inventory system to control its stock levels. For a particularly popular black ale (a type of beer), historical data shows that the distribution of weekly demand is approximately normal, with mean 7 and standard deviation 2. Replenishment lead time for this beer store is about 5 weeks. Each unit of this beer costs the store $60. Although excess demands are back-ordered, the store owner estimates that unfilled demands cost about $100 per unit in bookkeeping and loss-of-goodwill costs. Fixed costs of replenishment are $150 per order, and holding costs are based on a 30% annual rate of interest. Assume each month is equivalent to 4 weeks. (a) What are the optimal lot sizes and reorder points for this beer? (b) What is the optimal safety stock for this beer? (c) What if the unfilled demands now incur a penalty cost of $75 per unit beer per week?
15.p The J&B Card Shop sells calendars featuring a different colonial picture for each month. The once-a-year order for each year’s calendar arrives in September. From past experience, the September-to-July demand for the calendars can be approximated by a normal distribution with m = 300 and standard deviation 5 20. The calendars cost $6.50 each, and J&B sells them for $15 each. a. Suppose that J&B throws out all unsold calendars at the end of July. Using marginal economic analysis, how many calendars should be ordered? b. If J&B sells surplus calendars for $1 at the end of July and can sell all of them at this price, how many calendars should be ordered?

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