Zartex Co. produces fertilizer to sell to wholesalers. One raw material – calcium nitrate – is purchased from a nearby supplier at $22.50 per ton. Zartex estimates it will need 5,750,000 tons of calcium nitrate next year. The annual holding cost for this material is 40% of the acquisition cost, and the ordering cost is $595. a) What is the most economical order quantity? b) How many orders will be placed per year? c) How much time will elapse between orders

Zartex Co. produces fertilizer to sell to wholesalers. One raw material – calcium nitrate – is purchased from a nearby supplier at $22.50 per ton. Zartex estimates it will need 5,750,000 tons of calcium nitrate next year. The annual holding cost for this material is 40% of the acquisition cost, and the ordering cost is $595. a) What is the most economical order quantity? b) How many orders will be placed per year? c) How much time will elapse between orders

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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You are the operations manager of a firm that uses the continuous review (EOQ) system to control your inventory. Suppose the firm operates 52 weeks per year, 365 days, and has the following characteristics for its primary item: Demand = 25,000 units/year %3D Ordering Cost = $30/order Holding Cost = $8/unit/year Lead Time = 2 weeks Standard Deviation in weekly demand = 100 units %3D What is the economic order quantity for this item? Between 400 and 450 units O Between 450 and 500 units Fewer than 400 units O Greater than 500 units
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?
The sales of Whole Care mouthwash at Jen's of Michigan over the past six months have averaged 2,000 cases per month, which is the current order quantity. Jen's of Michigan's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions What is EOQ? What is the cost reduction? What is the reorder point? What is Time between Orders (TBO)?
The sales of Whole Care mouthwash at Tom's of Maine over the past six months have averaged 2,000 cases per month, which is the current order quantity. Tom's of Maine's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions a)     What is EOQ? b)    What is the cost reduction? c)     What is the reorder point? d)    What is Time between Orders (TBO)?
A billiard ball maker must place orders for resin, a raw material for billiard balls. It uses resin at a rate of 120 kilograms each day, and incurs a cost of $0.4 per kilogram per day to hold inventory. The ordering cost is $150 per order. Lead time for delivery is 4 days. Assume 365 day in a year.What is the optimal length of the order cycle associated with the minimum total cost of ordering and inventory holding? [Round your final number with two decimals]       0.13 days       1.10 days       2.50 days       47.76 days       None of the above PLEASE SHOW CALCULATIONS NOT JUST ANSWER
Kabel Market store sells electric cable. The demand for cable is normally distributed. The inventory related information at Kabel Market is as follows: Average Annual Demand = 16,900 meters Standard deviation of weekly demand = 28 meters Cable selling price = AMD 640.00 per meter   Ordering cost = AMD 1,250.00 per order Lead time = 5 weeks Annual inventory-holding cost estimate = 2.5% of the cable selling price Required service level = 95% Kabel Market works 52 weeks a year. Note: The approximate z values are: for 0.9 ≈ 1.28, for 0.92 ≈ 1.405, for 0.95 ≈ 1.645, for 0.98 ≈ 2.05. Suppose the bar management practices the fixed-QUANTITY ordering system with the use of the economic order quantity. Answer the following questions: (i)  How many meters of cable they order from the supplier each time? (ii)  When do they place an order? (iii) What is the safety stock?
Mac-in-the-Box, Inc., sells computer equipment by mail andtelephone order. Mac sells 1,200 flat-bed scanners per year.Ordering cost is $300, and annual holding cost is 16 percentof the item’s price. The scanner manufacturer offers thefollowing price structure to Mac-in-the-Box: What order quantity minimizes total annual costs?
Johnson Tire Plaza (JTP) is a large chain of tire shops, who sells various brand of automobile tires. The yearly demand of a particular brand of time is about 8,888 units per year. JTP purchases these tires from a supplier. The ordering cost is $124 per order and the holding cost is $19 per tire per year. The supplier always deliver the shipment within 6 days after receiving a replenishment order from JTP. The company operates 250 days per year. Assume EOQ model is applicable. What is the optimal annual inventory cost for JTP? Use at least 4 decimal places.
10 Use the information presented in the graph to answer the following questions: Annual Cost C3 C2 Q1 You are also given the following information: Q1 =450 .Q2 = 700 C1 = 350 C2 = 750 1300 Q2 Order Quantity Which annual inventory cost component does the blue line represent? Total cost Which annual inventory cost component does the green line represent? Holding cost What is the Economic Order Quantity (EQ9) based on th Which annual inventory cost component does the red line represent? Ordering cost 220
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays set up cost equal to $20 for each battery and estimates that the annual holding cost is $8.4. The working days for the company are 300 days per year Determine the economic order quantity (EOQ). b. How many orders will be placed per year using the EOQ? c. What is the expected time between orders? d. Determine the ordering, holding, and total inventory costs for the EOQ
A company purchases special metal parts to make office furniture in lots of 100 units to satisfy an annual demand of 1600 parts. Holding cost for the parts is 0.3 dollars per unit per month and ordering cost is 40 dollars per order. Answer the following questions: Formulas: a) What is the EOQ? b) What are the costs previously (with 100 units per order) and now with EOQ. Hint: Calculate total holding cost and ordering cost for 100 units, and then same costs with EOQ. Which one (100 units or EOQ) is better in terms of costs? EOQ = SQRT(2Ds/h) THC=h*(Q/2) TOC=s*(D/Q) TC=THC+TOC please answer in excel
32) ABC Shop ABC shop uses glue at a daily rate that is normally distributed with a mean of 250 ounces and a standard deviation of 26 ounces. When the shop places an order for glue it requires 9 days for the order to arrive. What is the Reorder Point if the shop wants an 84% Service Level? Round to an integer value. Group of answer choices a) 2,347 ounces b) 1,538 ounces c) 1,967 ounces d) 2,307 ounces e) 2,327 ounces f) 1,558 ounces