A large producer of household products purchases a glyceride used in one of itsdeodorant soaps from outside of the company. It uses the glyceride at a fairly steady rateof 40 pounds per month, and the company uses a 23 percent annual interest rate tocompute holding costs. The chemical can be purchased from two suppliers, A and B. Aoffers the following all-units discount schedule:Order SizePrice per Pound0

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Answered: A large producer of household products…

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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Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 14,100 units. Southeastern estimates its annual holding cost for this item to be $22 per unit. The cost to place and process an order from the supplier is $73. The company operates 300 days per year, and the lead time to receive an order from the supplier is 3 working days. a) What is the economic order quantity? 306 units (round your response to the nearest whole number). b) What are the annual holding costs? $ 3365 (round your response to the nearest whole number). c) What are the annual ordering costs? $ 3364 (round your response to the nearest whole number). d) What is the reorder point? units (round your response to the nearest whole number).
A computer products store stocks color graphics monitors, and the daily demand is normally distributed with a mean of 1.6 monitors and a standard deviation of 0.4 monitor. The lead time to receive an order form the manufacturer is 15 days. Q 17.1- Determine the reorder point that will achieve 98 % service level.
A company has a demand for 25,750 units annually. The holding cost is 33% of the item cost which is $10.00. The ordering or set-up cost is $250.00 per order and the lead time is 5 days. Assume that there are 350 days per year Suppose a price break of $50 per order is offered for purchase quantities of 2,000 or greater. Question: What is the reorder point for this inventory strategy? What is the inventory position immediately after an order is placed for the inventory strategy that you have selected?
You are in the process of deciding the optimal order quantity of shampoo packs for a hotel. The supplier charges you $47 per order and your stockroom costs approximately $0.69 per shampoo pack per year to store the product. Based on prior research, you were able to determine that the hotel goes through approximately 94 shampoo packs per day. They hold 0 safety stock. The supplier is willing to give the following quantity discounts for the product. Using the order quantity that will minimize total cost, what is the total annual cost? Quantity 1 - 1499 $2.25 $2.10 $2.05 $2.03 Note: Round your answer to 2 decimal places. Do NOT include $ sign or a comma. For example, answer like 50246 and NOT $50,246 Answer: 1500 - 3999 4000 - 7999 8000+ Price Check
You have been asked by your boss to calculate the Economic Order Quantity (EOQ) for one of the major sub-components used by your firm. You have been provided the following data: The weekly demand for this part is 125 units. The cost of the sub-component is $300. The annual holding cost is 0.5% and the ordering or setup cost is $50.
20
Amy drinks 5 capsules of coffee every week (assuming 50 weeks in a year). Each capsule costs $1, and the delivery fee is $5 per order. The annual holding cost rate is 20%. The coffee manufacturer provides a special offer: the price of each capsule becomes $0.98 if the order quantity is at least 80 capsules. Amy, therefore, conducts the following analysis: STEP 1: The EOQ without the discount is around 112 units, and the corresponding minimum ordering + holding cost is $22.36. STEP 2: The ordering + holding cost with the quantity discount is K*R/80 + h_new*80/2 = $23.47. STEP 3: The additional ordering + holding cost to get the discount offer is $23.47 - $22.36 = $1.11. STEP 4: The additional saving in the purchasing cost is R*($1 - $0.98) = $5. According to Amy's analysis, she decides the quantity = 80 to obtain the discount, but the decision is not optimal. Please choose the earliest step that Amy makes a mistake. a Step 1 b Step 2 c Step 3 d Step 4
Consider the company in Question 1. Now the company is considering working with a local supplier. Since the local supplier is located close to the company, there is no restriction on the frequency of the orders. The purchasing cost from this local supplier is $80 per unit. Every time they place an order there is a fixed shipping cost of $12. Holding cost is again based on 20% annual interest rate. Calculate the economic order quantity. Calculate the total annual cost the company will incur with this supplier if they use the order quantity you found in (a) (Total Annual Cost = Annual Ordering Cost + Annual Inventory Holding Cost + Annual Purchasing Cost) The company is also considering producing the product at home. The production rate is 12000 units per year. They estimate that the setup cost is $20 per setup. The production cost is $60 per unit. The holding cost is based on the annual interest rate and the production cost of the product. Calculate the economic production quantity. How…
Using the fixed-order-quantity model, which of the following is the total ordering cost of inventory given an annual demand of 25,000 units, a cost per order of $80, and a holding cost per unit per year of $16?
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,500 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $78. The company operates 300 days per year, and the lead time to receive an order from the supplier is 3 working days. a) What is the economic order quantity? units (round your response to the nearest whole number). (round your response to the nearest whole number). b) What are the annual holding costs? $ c) What are the annual ordering costs? $ (round your response to the nearest whole number). d) What is the reorder point? units (round your response to the nearest whole number).
You are a purchasing manager in charge of stocking a certain type of product. Weekly demand for these products is normally distributed, with a mean of 100 and a standard deviation of 50. Holding costs are 25%, and you must hold a level of inventory corresponding to a cycle service level of 95%. You are faced with two suppliers, QUALITY Products and BEST Products, who offer the following terms. QUALITY sells the products for €5,000 with a minimum order of 100, and a lead time of 1 week with a standard deviation of 0.1 week. BEST sells the transformer for €4,800, has a minimum batch of 1,000, a lead time of 5 weeks, and a lead-time standard deviation of 4 weeks. If you could use both suppliers, how would you structure your orders? Describe the dimensions of supplier performance that affect total cost
We have demand for a product with 1500 units/ month. The vendor offers. quantity discounted method for purchasing as the table below: Order Quantity condition Price (USD) 1+299 10 >300 7 Ordering lead-time is 3 days. Ordering cost 10 $/ order, salary for ordering staff is 3S/ order. Monthly Warehouse renting free is 5%, and interest rate is 7%. Salary for warehousing staff is 300$/month. Please suggest the best ordering policy. I

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