A corner store sells 100 bags of potato chips each day. The potato chips bags are purchased from a supplier for a price of $5 per 100 bags and an ordering cost of $10 per order. The corner store's annual inventory holding cost percentage is 25%. If the demand for potato chips increases by 25%, what will be the change in its economic order quantity (EOQ)? It will increase by less than 25% It will increase by 25% It will not change O It will increase by more than 25%

A corner store sells 100 bags of potato chips each day. The potato chips bags are purchased from a supplier for a price of $5 per 100 bags and an ordering cost of $10 per order. The corner store's annual inventory holding cost percentage is 25%. If the demand for potato chips increases by 25%, what will be the change in its economic order quantity (EOQ)? It will increase by less than 25% It will increase by 25% It will not change O It will increase by more than 25%

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Sarah’s Organic Soap Company makes organic liquid soaps. She purchases organic Palm oil to make her soaps. She needs 1,000 kgs of Palm oil per day on average. The supplier charges a $60 delivery fee per order (which is independent of the order size). Sarah’s annual holding cost is $1.825 per kg of palm oil. Assume there are 365 days a year. a. What is the daily cost of ordering and holding when EOQ is ordered? b. Again, assume that Sarah needs 1,000 kgs of Palm oil per day. Sarah’s supplier is willing to sell Palm oil to her at a 10% discount on its selling price if she purchases 10,000 kgs at a time. If Sarah takes the offer and orders 10,000 kg at a time, how much will be the resulting daily cost of ordering and holding? (Assume that the fixed cost of ordering is $60 per order and the per unit inventory holding cost is 0.005 per day per kg of Palm oil.) c. Again, assume that Sarah needs 1,000 kgs of Palm oil per day. Sarah’s supplier is willing to sell Palm oil to her at a 10%…
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32) ABC Shop ABC shop uses glue at a daily rate that is normally distributed with a mean of 250 ounces and a standard deviation of 26 ounces. When the shop places an order for glue it requires 9 days for the order to arrive. What is the Reorder Point if the shop wants an 84% Service Level? Round to an integer value. Group of answer choices a) 2,347 ounces b) 1,538 ounces c) 1,967 ounces d) 2,307 ounces e) 2,327 ounces f) 1,558 ounces
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Zartex Co. produces fertilizer to sell to wholesalers. One raw material – calcium nitrate – is purchased from a nearby supplier at $22.50 per ton. Zartex estimates it will need 5,750,000 tons of calcium nitrate next year. The annual holding cost for this material is 40% of the acquisition cost, and the ordering cost is $595. a) What is the most economical order quantity? b) How many orders will be placed per year? c) How much time will elapse between orders
Dunstreet's Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on-hand. How many sheets should you order? Note: Use Excel's NORM.S.INV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.
All Seasons Flower Shop uses 870 clay pots a month. The pots are purchased at $ 6 each. Annual holding cost per pot is estimated to be 35% of purchase cost. Ordering cost is $ 40 per order. The shop operates 12 months in a year. What would be the difference in total cost if an order quantity of 1000 is used instead of the EOQ. Note: calculate the difference as “total cost with Q = 1000 – total cost with EOQ”.