41. A manufacturer of greeting cards must determine the size of production runs for a cer-tain popular line of cards. The demand for these cards has been a fairly steady 2 mil-lion per year, and the manufacturer is currently producing the cards in batch sizes of50,000. The cost of setting up for each production run is $400.Assume that for each card the material cost is 35 cents, the labor cost is 15 cents, andthe distribution cost is 5 cents. The accounting department of the firm has establishedan interest rate to represent the opportunity cost of alternative investment and storagecosts at 20 percent of the value of each card.a. What is the optimal value of the EOQ for this line of greeting cards?b. Determine the additional annual cost resulting from using the wrong production lot size.

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Answered: 41. A manufacturer of greeting cards…

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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Your Corporation manufactures four products that use the same raw material and production machine. Your Company is experiencing a shortage of pounds of the raw material. Information related to the four products are shown below. Products A B C D Selling price $40 $32 $35 $65 Variable cots $34 $22 $27 50 Machine hours per unit 6 8 5 7 Pounds per unit 18 20 28 38 To maximize profit next month, in what order would it be best to schedule production (first to last)? a. A, B, C, D b. A, D, B, C c. B, D, A, C d. D, A, C, B
Kooyman hardware sells 31 different types of drills. They had demand for 25 of the drills and satisfied 78 percent of the demand. What was their fill rate for drills? % ( Do not round intermediate calculations.
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Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.
1. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the EOQ. 2. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the total carrying cost. 3. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the total ordering cost. 4. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the number of orders required per year. 5. Minmax Processing Company has an average requirement of 5 boxes of…
20
1. A local producer of vegetables is deciding how much inventory to have to meet the next week's demand. Vegetable products are perishable with a shelf-life of a week. Based on the historical observations, the company expects the weekly demand to follow a normal distribution with mean 4500 pounds and standard deviation of 400 pounds. The price of the product is $14 per pound in the store, and it costs $6 to produce. If there are any leftovers, the company is required to dispose them safely to avoid any pollution. This process costs $0.5 per pound. Answer the following questions. a) What is the cost of overage per pound? b) What is the cost of underage per pound? c) What is the optimal order quantity?
As with other products, Fisher-Price faces the decision of how many Weather Teddy units to order for the comingholiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, or28,000 units. The wide range of order quantities suggested indicates considerable disagreement concerning themarket potential. The product management team asks you for an analysis of the stock-out probabilities forvarious order quantities, an estimate of the profit potential, and to help make an order quantity recommendation.Fisher-Price expects to sell Weather Teddy for $24 based on a cost of $16 per unit. If inventory remains afterthe holiday season, Fisher-Price will sell all surplus inventory for $5 per unit. After reviewing the sales historyof similar products, Fisher-Price’s senior sales forecaster predicted an expected demand of 20,000 units with a.95 probability that demand would be between 10,000 units and 30,000 units. Question: One of Fisher-Price’s managers felt…
According to the EOQ and increase in interest rates would tend to....? A: increase the number of units ordered for inventory and increase the number of orders per year B: decrease the number of units ordered for inventory and reduce the number of orders per year C: decrease the number of units ordered for inventory and increase the number of orders per year D: increase the number of units ordered for inventory and reduce the number of orders per year
3. a) Calculate the Lot size for Zara production clothes. D d р Q H S = = 11 Annual demand = 400,000 units Daily demand = 400,000/250= 1,600 per day Daily production rate = 4,000 units EOQ desired = 400 = Holding cost $20 per unit Setup cost (to be determined) = b) Determine optimal number of needles to order. D = 1,000 units S = $10 per order H = $.50 per unit per year c) Determine expected number of orders. d) Determine the total annual cost.
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