A company sells cell phone cases. Every time they make an order, they pay $25 for thetransportation and $5 to prepare the ordering request. Holding cost per year as a fraction ofunit cost is 25% and each case costs $10. The monthly demand is 200 units.a. Calculate the minimized total annual inventory cost.

Economic Order Quantity is an inventory repunishing method which identify the optimal cost for…

Answered: A company sells cell phone cases. Every…

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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Stuart's Custom Golf manufactures steel castings for use in premium lob wedges. The annual demand for these steel castings is 1,500 units. Stuart's Custom Golf can produce 12 steel castings per hour and the company works an 8 hour day for 250 days each year.The cost to set up for production of the steel castings is $1000. Each steel casting costs $8.85. The company uses a rate of 30% of the item cost to determine the annual holding cost. Calculate the economic production quantity.
Dave’s local college football team is playing for the national championship in next month’s bowl game, and he’s thinking about having “We’re number one” T-shirts imprinted in honor of the team. It’s too late to get the shirts before game day, but if he orders today, he can get them within a few days after the game. The shirts must be ordered in multiples of 1000, and Dave has estimated the amount of profit he will make for possible outcomes of the game. Given the following payoff table, what will Dave do if he uses the maximin criterion? The maximax criterion? The minimax regret criterion? Order no shirts $0 wins $0 loses $0 ties Order 1000 shirts $800 wins $-200 loses $200 ties Order 2000 shirts $1600 wins $-400 loses $300 ties
The two-bin approach is used to control inventory for a particular low-cost component. Each bin holds 1000 units. The annual usage of the component is 40,000 units. Cost to order the component is around $50. (a) What is the imputed holding cost per unit for this data? (b) If the actual annual holding cost per unit is only 5 cents, what lot size should be ordered? (c) How much more is the current two-bin approach costing the company annually, compared to the economic order quantity?
Blue Wave corp will need 275,000 units of raw materials next year. The purchase price of the raw materials per unit is 950. The ordering cost for each order is 2,000, while the carrying cost is 30% of the average inventory value. Calculate:a. The most economical order quantity (EOQ)b. How many times should the company order in a year?c. How many days should the company place an order once (1 year = 365 days)?
The demand for a particular part called SKU 005 is 1,500 units a year. The cost of one SKU 005 is $64.00. It costs $60.00 to place an order SKU 005, and the user of SKU 005 has a per year inventory carrying cost of 25% of unit cost. Assume that there are 250 working days in the year where SKU 005 is used. What is the combined annual holding and ordering cost of an order size of 200 units for SKU 005? OA. $2050 O B. $1360 O C. $1697 O D. $825 O E. $1200
A components manufacturer uses approximately 20,000 units annually of an item. They are used at a steady rate during the 250 workdays that the plant operates. The cost of each item is $7.00, and the annual carrying cost is $0.50 per unit per year. The ordering cost is $50. What is the economic order quantity?
A manufacturer buys cardboard boxes from a supplier. The annual demand is 40,000 boxes and is uniformly distributed. The boxes cost $5 each. The estimated order cost is $10, and the carrying cost rate is 20% per year. What is the EOQ and what is the annual order and carrying cost? How many times a year are orders placed, and what is the average time, in weeks, between orders? Using the answer from (b), if you round the average time between orders to the nearest week, what should the order quantity be? Would you recommend using this order quantity and time interval? Suppose that the actual demand turns out to be 80,000 boxes instead of 40,000 boxes.If you had used the EOQ from the (a), what would be the annual order and carrying cost be?
A medical equipment has an average monthly demand is 134 units. Its unit cost is $385. It costs $486 to place an order, and the inventory carrying cost is $44 per unit per year. The equipment requires a 95% of service level with a safety stock requirement of 20 units. What is the equipment's minimum annual total inventory cost?
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has a demand of 6,000 units a year. The purchasing cost of each unit is $16 (additional 5% discount applies if at lease 150 units ordered a time), and the inventory carrying cost is $3 per unit per year. The average ordering cost is $10 per order. It takes about 3 working days for an order to arrive. (This is a corporate operation, and there are 300 working days per year.) Answer the following questions, Q1~Q5. Note that you must include Excel formulas/calculations showing how you arrive at the answer. Q1: Assume that the demand is consistent throughout the year. What is the ROP? Note that stockouts and unnecessary inventory holding should be avoided at any times. Q2: Assume that the demand is consistent throughout the year. Based on the EOQ model, to minimize the costs of purchasing, ordering and inventory holding…
Piping Manufacturing assembles television sets. The company purchases 3,600 television kits per year, at a cost of $65 per unit. The ordering cost is $31 and annual inventory costs represent 20% of the purchasing cost. What is the Economic Order Quantity? What is the total annual cost? Hold-it Inc. produces reusable shopping bags. Demand is 20,000 bags per day, 5 days per week, 50 weeks per year. Production is 50,000 per day. The setup cost is $200 and the annual holding cost rate is $.55 per bag. Calculate the EPQ, the total cost, the cycle length and optimal production run length.
Manipulation Manufacturing Company uses 1,000 units of Chip annually in its production. Order costs consist of P10 for placing a long-distance call to make the order and P40 for delivering the order by truck to the company warehouse. Each Chip costs P100 and the carrying costs are estimated at 15.625% of the inventory cost. If the EOQ for Chip is 80 and the total ordering cost is P625. Compute for the Total Carrying Costs.
A gift shop sells 400 boxes of scented candles a year. The ordering cost is $50 for scented candles, and holding cost is $25 per box per year. What is the economic order size for scented candles?

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