Devin HarrisWA3
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School
Thomas Edison State College *
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Course
7100
Subject
Industrial Engineering
Date
Feb 20, 2024
Type
docx
Pages
3
Uploaded by AmbassadorMantis4132
Devin Harris
SOP-7200-MB900
Written Assignment 3
February 9, 2024
Page 350, Problem 11 [MO3.1, MO3.2, MO3.3, MO3.4]
11. At Dot Com, a large retailer of popular books, demand is constant at 32,000 books per year.
The cost of placing an order to replenish a stock is $10, and the annual cost of holding is $4 a
book. Stock is received 5 workings days after an order is placed. NO backordering is allowed.
Assume 300 working days a year.
a.
What is Dot Com's optimal order quantity?
= 2(32,000)(10) / 4
= 400 books
b. What is the optimal number of orders per year?
= 32000 / 400
= 80 orders
c.
What is the optimal interval between orders?
= 400 / 32,000
= .0125(300)
= 3.75 or 4 days
d.
What is demand during the lead time?
= (32,000/300)(5)
= approximately 533 books
e.
What is the reorder point?
533 books
f.
What is the inventory position immediately after an order has been placed?
= 533 + 400
= 933 books
Page 351, Problem 20 [MO3.1, MO3.2, MO3.3, MO3.4]
20. Your firm uses a continuous review system and operates 52 weeks per year. One of the
SKUs has the following characteristics.
Demand = 20,000 units/year
Ordering cost = 40/order
Holding cost = 2/unit/year
Lead time = 2 weeks
Cycle-service level = 95%
a.
Calculate the item's EOQ. What is the average time, in weeks, between orders?
= (2)(20,000)(4) / 2
= 894
= 894 / 20000 * 52
= approximately 2 weeks
b.
Find the safety stock and reorder point that provide a 95 percent cycle-service level.
= (2)(100)(1.75)
= 350 units
= (350) + (20,000/52)
= 734
c.
For these policies, what are the annual costs of holding the cycle inventory and placing orders?
= (20,000/52)(2)/4
=192
= (20,000/192)(40)
= $4,166
d.
A withdrawal of 15 units just occurred. Is it time to reorder? If so, how much should be
reordered?
A re-order is not necessary.
Page 503, Problem 2 [MO3.1, MO3.2, MO3.3, MO3.4]
2. Cyberphone, a manufacturer of cell phone accessories, ended the current year with annual
sales (at cost) of $48 million. During the year, the inventory of accessories turned over six times.
For the next year, Cyberphone plans to increase annual sales (at cost) by 25 percent.
a.
What is the increase in the average aggregate inventory value required if Cyberphone maintains the same inventory turnover during the next year?
= 60 million / 6 million x 10 million
= around 2 million
b.
What change in inventory turns must Cyberphone achieve if, through better supply chain management, it wants to support next year's sales with no increase in the average aggregate inventory value?
= 48 million / 6 x 8 million
= approximately 7.5 times for change
Page 503, Problem 8 [MO3.1, MO3.2, MO3.3, MO3.4]
8. Dogs-R-Us and K-9 Inc are two retail stores that cater to the needs of dog owners in the
greater Charleston area. There is healthy competition between these two establishments. Both
operate 52 weeks a year and both sell approximately the same type and dollar value of items.
Table 12.4 provides the cost of goods sold, the average inventory level, and unit value of each
item sold in the two stores.
a.
Compare the two retail stores in terms of average aggregate inventory value.
AAIV Dogs-R-Us = 210x55 + 1100x2.50 + 60x12 + 360x7.50 + 10x65, etc.
AAIV Dogs-R-Us = 28,700
AAIV K-9 = 11443
Dogs-R-Us has the higher average in inventory value.
b.
Compare the two retail stores in terms of weeks of supply.
Dogs-R-Us = 28,700 / 52 = 551.9
K-9 = 11443/52 = 220
Dogs-R-Us will have a higher weekly supply.
c.
Compare the two retails stores in terms of inventory turnover.
Dogs-R-Us = 19.51
K-9 = 55.93
K-9 will have higher inventory turnover because it has less product in stock to sell on average.
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