13.13 The TransCanada Lumber Company and Mill processes 10,000 logs annually,operating 250 days per year. Immediately upon receiving an order, the loggingcompany's supplier begins delivery to the lumber mill at the rate of 60 logs per day. Thelumber mill has determined that the ordering cost is $1600 per order, and the cost ofcarrying logs in inventory before they are processed is $15 per log on an annual basis.Determine the following:a. The optimal order sizeb. The total inventory cost associated with the optimal order quantityc. The number of operating days between ordersd. The number of operating days required to receive an order

Optimal order quantity helps the company to minimize logistic, overhead and stockouts costs. It is…

Answered: 13.13 The TransCanada Lumber Company…

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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Franz Beckenbauer and Johan Cruyff are purchasing managers for the headquarters of a largesports marketing company chain with a central inventory operation. Their fastest-moving inventory item hasa daily demand of 35 units. The cost of each unit is £200, and the inventory carrying cost is £25 per unitper year. The average ordering cost is £60 per order. It takes about 5 days for an order to arrive, and thereare 252 working days per year. a) To minimize the cost, how many units should be ordered each time an order is placed?What is the total annual inventory cost, including the cost of the units?b) How can they manage the days it takes for an order to arrive? (How does it impact theiroperations and costs?)c) b) Even if there is substantial uncertainty in the parameters in the EOQ-model, it is still quite auseful model. Discuss why.
Thomas Kratzer is tbe purchasing manager for theheadquarters of a la rge insurance company chain with a centralinventory operation. Thomas's fas test-moving inventory itemhas a demand of 6,000 units per year. The cost of each unit is$ 100, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about 5 days for anorder to arrive, and the demand for I week is 120 units. (This is acorporate operation, and there are 250 working days per year.)a) What is the EOQ?b) What is the average inventory if the EOQ is used?c) What is the optimal number of orders per yea r?d) What is the optimal number of days in between any two orders?e) What is the annual cost of ordering and holding inventory?f) What is the total annual inventory cost, including the cost ofthe 6,000 units?
Investigate the historical evolution of inventory management strategies, with a focus on the contributions of R. H. Wilson.
52 Demand for an item is 3,800 units per year. Each order placed costs $15; the annual cost to carry items in inventory is $10 each. In what quantities should the item be ordered? Note: Round your answer to the nearest whole number.
EOQ, reorder point, and safety stock Alexis Company uses 937units of a product per year on a continuous basis. The product has a fixed cost of $44 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.
13.37. Kelly's Tavern serves Shamrock draft beer to its customers. The daily demand for beer is normally distributed, with an average of 20 gallons and a standard deviation of 4 gallons. The lead time required to receive an order of beer from the local distributor is 12 days. Determine
Based on the records of ABC company, the annual demand for item HP26 has annual demand of 6,582 units. The ordering cost per order is PhP105, and the holding per unit per year cost is PhP136. a. What is the Economic order quantity?b. What is number of times the company will order?c. What is the annual carrying cost?d. What is the annual ordering cost?e. What is the total inventory costs incurred at EOQ?
explain the characteristics of inventory situations: 1. lead time 2. sources and level of risk 3. Static versus dynamic problems
Examine the historical evolution of inventory management strategies, with a focus on the significant contributions of R. H. Wilson.
The company Marombeiro is a commercial representative of a food supplement widely consumed in gyms. The average daily demand for the product is 1,500 units and a standard deviation of 300 units. Average shipping time is 5 days. Of course, if the order is placed at the end of the week, it may take a little longer to receive the shipment, so the standard deviation of the delivery time is 2 days. The unit has a value of R$ 50.00 per unit in stock, an order cost of R$ 50.00 and an annual maintenance fee of 20%. Assume the service level is 99.5%. How much safety stock should the company have? ( )7,500 units ( )19,350 units ( )3,074 units ( )7,916 units
Company S offers the following discount schedule for its sheets. Company K orders sheet from Company S. Company K has an ordering cost of $45. The carrying cost is 20%, and the annual demand is 100 sheets. Order Unit Cost 9 sheets or less $18.00 10 to 50 sheets $17.50 More than 50 sheets $17.25 The total cost of ordering more than 50 sheets is
Investigate the effects of demand variability on the overall effectiveness of the Wilson approach in inventory management.

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