Cherry owns a fruit stand at the corner of Espana Street and N. Reyes Street. She buys ripe bananas every day for P20 per hundred and sells them for P50. At the end of the day, all unsold ripe bananas must be used for household consumption. Pas demand has been 500 bananas on 40 days, 600 on 60 days, 700 on 60 days and 800 on 40 days. Using the EV concept, find the optimal daily stock action

Cherry owns a fruit stand at the corner of Espana Street and N. Reyes Street. She buys ripe bananas every day for P20 per hundred and sells them for P50. At the end of the day, all unsold ripe bananas must be used for household consumption. Pas demand has been 500 bananas on 40 days, 600 on 60 days, 700 on 60 days and 800 on 40 days. Using the EV concept, find the optimal daily stock action

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost. The restaurant has figured that the most economical order size or EOQ is approx. 409 (rounding up the decimals). Suppose that things have become uncertain and that customer demand is no more constant. Customer demand is now normally distributed with mean being the same as given in the problem description and standard deviation = 30 units per week. The supply source is still very reliable and as a result the lead time is constant. Find out the safety stock needed to achieve 95% customer service level. O 55 65 075 85 None of…
A company operates for 50 weeks a year and uses a fixed quantity inventory system for one of its most important items. Below are the characteristics for the item: Weekly demand follows normal distribution: mean of 400 units and standard deviation of 100 units Order Cost = $40 per order Annual Holding cost = $2/unit/year Desired service level = 95% (z = 1.645) Lead Time = 4 weeks Economic Order Quantity (EOO) = 894 units Now suppose that the management is considering switching to a fixed time inventory system where the time between orders is 2 weeks. Everything else being the same as the information provided for the original problem, which system (Q or P system) is likely to have more safety stock? Please explain why.
Golden Crust Bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags ayear. Preparing an order and receiving a shipment of flour involves a cost of $10 per order.Annual holding costs are $75 per bag. Once an order for flour is placed, it takes six (6) days toreceive the order from the flour factory. The bakery operates 350 days per year.Calculate the following:(i) Economic Order Quantity(ii) Expected number of orders (Order Frequency)(iii) Average inventory(iv) The annual holding cost(v) The annual ordering cost(vi) The total annual cost of inventory management(vii) Reorder point(viii) If holding costs were to increase by $9 per year, how much would thataffect the minimum total annual cost?
ou are a newsvendor selling the 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 the 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. How many copies of the San Pedro Times should you buy each morning and what is the probability that you will run out of stock? Use Excel's NORM.S.INV() function to find the z value.
A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its 1-irons, which have the following characteristics: > Demand (D) = 2,000 units/year > Demand is normally distributed > Standard deviation of weekly demand = 2 units > Ordering cost = $30/order > Annual holding cost (H) = $5.00/unit > Desired cycle-service level = 85% > Lead time (L) = 4 weeks Refer to the standard normal table for z-values. a. If the company uses a periodic review system, P should be 3.87 weeks. (Enter your response rounded to the nearest whole number.) T should be units. (Enter your response rounded to the nearest whole number.)
A building materials stockist obtains its cement from a single supplier. Demandfor cement is reasonably constant throughout the year. Last year the company sold 2 000tonnes of cement. It estimates the costs of placing an order at around 25 MU each timean order is placed and charges inventory holding at 20% of purchase cost. The companypurchases cement at 60 MU per tonne.a) How much cement should the company order at a time?b) Instead of ordering EOQ, why not a order convenient 100 tonnes? Please mention formulas and do it in detail so I can understand.
ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (B) Economic Order Quantity 1. How much would the total inventory related (ordering plus carrying) costs be if the economic order quantity wasfollowed (excluding safety stock)? (D) Cost-Benefit Analysis: If ABC maintains its current inventory policy for the year,1. How much would the entity save it followed the reorder point and economic order quantity models?…
The manager of an auto parts store is reviewing the inventory policy for one of their fastest selling products — car batteries. The store sells an average of 40 car batteries every week. The cost to hold one battery in inventory for a year is $15. The ordering cost per order is estimated at $50. The store operates all 52 weeks in a year.Use the information in Scenario 9.5. If the manager decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost? Group of answer choices greater than $1800 but less than or equal to $2100
ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. 18. Explain what would happen to the ordering cost, carrying cost and total inventory-related costs if the entity doesnot follow the economic order quantity based on the previous numbers
ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (C) Reorder Point and Economic Order Quantity19. What would the average number of boxes be if the safety stock from Part A was kept and the EOQ from Part Bwas followed? Round off to two decimal places.20. How much would the carrying cost for the year be based on item 19?21. How much would the total inventory related (ordering plus carrying) costs be if the…
I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can. Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8. The replenishment lead time is 14 weeks. Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill. There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum. In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)? *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
You are running the supply chain for a grocery store operating across Upstate Souun Carolina. You operate a central warehouse and have multiple stores. For each of the following situations determine if it would be best to operate inventory for the product that is pooled at your central warehouse or determined individually by each retail store. Provide at least 1 sentence discussing your choice. (a) The demand for boxes of Nutty Bars at each store during a week is i.i.d. with mean u = 1000 and standard deviation o = Nutty Bars are high compared to holding costs for Nutty Bars. 10. Transshipment costs between the stores for (b) The demand for Fudge Rounds at each store during a week is i.i.d. with mean u = 200 75. Transhipment costs between the stores for Fudge and standard deviation o Rounds are relatively small compared to holding costs.