Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 10, Problem 19PA
Summary Introduction
To determine: The inventory holding cost for a bicycle seat.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An integrated circuit manufacturer’s annual cost of holding inventory is 48 percent.What inventory holding cost (in $) does it incur for an item that costs $300 and has aone-month supply of inventory on average?
A bicycle manufacturer purchases bicycle seats from an outside supplier for $22 each.The manufacturer’s inventory of seats turns over 1.2 times per month, and the manufacturer has an annual inventory holding cost of 32 percent. What is the inventory holdingcost (in $) for a bicycle seat?
The average expense of keeping inventory for an integrated circuit producer is 48 percent.What inventory keeping expense (in $) does an object cost $300 and has an estimated one-month inventory supply?
Chapter 10 Solutions
Operations Management
Ch. 10 - It is costly to hold inventory, but inventory can...Ch. 10 - A delivery truck from a food wholesaler has just...Ch. 10 - Prob. 3CQCh. 10 - Prob. 4CQCh. 10 - Prob. 5CQCh. 10 - Prob. 6CQCh. 10 - Prob. 7CQCh. 10 - Prob. 8CQCh. 10 - Prob. 9CQCh. 10 - Prob. 10CQ
Ch. 10 - Prob. 11CQCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - An electronics manufacturer has 25 days-of-supply...Ch. 10 - Prob. 5PACh. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - An online shoe retailers annual cost of holding...Ch. 10 - Prob. 10PACh. 10 - Prob. 11PACh. 10 - Prob. 12PACh. 10 - Prob. 13PACh. 10 - Prob. 14PACh. 10 - Prob. 15PACh. 10 - Prob. 16PACh. 10 - A retailer has annual sales of 500,000 and an...Ch. 10 - Prob. 18PACh. 10 - Prob. 19PACh. 10 - Prob. 1CCh. 10 - Prob. 3CCh. 10 - Prob. 4C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardA local bookstore turns over its inventory once every four months. The bookstore's annual cost of holding inventory is 36 percent. What is the inventory holding cost (in $) for a book that the bookstore purchases for $10 and sells for $18? ANSWER 6 A bicycle manufacturer purchases bicycle seats from an outside supplier for $20 each. The manufacturer's inventory of seats turns over 12.44 times per year, and the manufacturer has an annual inventory holding cost of 32 percent. What is the inventory holding cost (in $) for a bicycle seat? ANSWERarrow_forwardWeekly Average Demand 110 Standard deviation of (weekly) demand 30 Setup cost ($) 1400 Lead time (in weeks) 2 Procurement cost ($) 200 Holding cost /unit/week ($) 3 You are given the demand and inventory related information about a grocery store’s product in the table. The store is open for 46 weeks in a year. What is the reorder point if it wants to achieve a service level of 97%? (Do not round your intermediate calculations. Round your final answers to the nearest whole number.arrow_forward
- Sam's Cat Hotel operates 50 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $12.00 per bag. The following information is available about these bags: > Demand = 95 bags/week > Order cost = $50.00/order > Annual holding cost = 20 percent of cost > Desired cycle-service level = 80 percent > Lead time =5 weeks (30 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 95 bags is incorrect and actual demand averages only 75 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)arrow_forwardDaily demand for product sample kits is normally distributed with a mean of 35 units and a standard deviation of 4. Supply is virtually certain with a lead time of 9 days. The cost of placing an order is $20, and annual carrying costs for one kit is 25 percent. The price of one kit is $12.50. Assume a year has 365 days.If a 99% service level is desired, what is average inventory on hand? If demand had no variation, what would the reorder point be?arrow_forwardSam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…arrow_forward
- Explain briefly the elements of inventory management?arrow_forwardA florist carries an average inventory of $12,000 in cut flowers. The flowers requirespecial storage and are highly perishable. The florist estimates capital costs at 10%,storage costs at 25%, and risk costs at 50%. What is the annual carrying cost?arrow_forwardA pharmacist is trying to determine the inventory order and stock levels for a particular drug. The following information is available about the drug. Demand (D) 85 tablets/week Working weeks per year 52 weeks Unit holding cost per year (H) $6 Order cost (S) $44/order Standard deviation of weekly demand (sd) 15 tablets Lead time (L) 2 weeks Desired cycle service level 95% If the pharmacist uses the continuous review (Q) system to control the inventory of the drug, what would be the order quantity and reorder point? If the pharmacist uses the periodic review (P) system to control the inventory of the drug, what would be the review interval and target inventory level? (Hint: Use the EOQ model to derive the review interval P)arrow_forward
- Your company is streamlining its inventory management systems and has evaluated its inventory purchasing using the Economic Order Quantity (EOQ) model. 75,000 units are used annually. Each unit costs $50. The order cost (per order) is $180 and the carrying cost per item per year is $40. On the basis of this information it is recommended that the EOQ is 822 units per order. Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.arrow_forwardABC Corporation is a large manufacturing company that has been using an outdated inventory management system for the past 10 years. The system has become slow and unreliable, causing delays in production and shipping. The IT department has recommended replacing the system with a modern cloud-based solution that can be accessed from anywhere and has the potential to integrate with other business systems.After a thorough evaluation of several vendors and their products, the IT team has recommended the purchase of a system called "InventoryPro". The system has a user-friendly interface, robust reporting capabilities, and is scalable to accommodate future growth.The CEO has approved the project, and the IT team has started working on the implementation plan. The project team includes a project manager, business analyst, database administrator, software developer, and testing specialist.As part of the project plan, the team will need to migrate the data from the old system to the new one,…arrow_forwardAs the Manager of Branson’s Department Store, you are responsible for ensuring that reorder quantities for the various items have been correctly established. You decide to test one item and choose product Z. A continuous review inventory policy has been used, so you examine this as well as other records and come up with the following data: Cost per unit $35 Holding cost 20 percent of unit cost Average daily demand 10 units Ordering cost $30 per order Standard deviation of daily demand 3 units Delivery lead time 4 days Because customers generally do not wait but go elsewhere, you decide on a service probability of 90 percent. Assume that Branson’s Department Store operates 320 days per year. [What is the annual demand (D)? Determine the optimal order quantity, Q*. Determine the reorder point (R) if demand is constant. Determine the reorder point (R) if demand is varies.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY