A museum of natural history is having problems managing their inventories. Low inventory turnover is squeezing profit margins and causing cash-flow problems.A Class A item, a birdfeeder is also a top-selling item. See information for this item in the table below. Management has been ordering in lots of 390 units.1) What is the annual cost of the current policy (hint: find the current total cost with the current order size, Q)?2) What is the Economic Order Quantity or the optimum order quantity (EOQ) for the birdfeeders?3) What is the total annual cost of ordering at the EOQ? How much could be saved if the museum ordered at the EOQ opposed to their current order size of 390 units?4) When should the museum place an order, at how many units (i.e.: what is their reorder point or lead time demand)?Sales per week (demand)Purchase costOrder costAnnual holding costBirdfeeder:Operating weeks per yearLead time for orders (weeks)Order sizeEOQ (calculated)18$$60.0045.0025% of purchase cost5222Total AnnualHoldingTotal AnnualorderingTCTC (Current Q)TC @ EOQReorder Point (ROP)Cost savings of ordering the EOQ

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Answered: A museum of natural history is having…

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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Current decision to buy: Ross White's machine shop uses 200 brackets each month during the course of a year. This usage is relatively constant throughout the year. Currently, these brackets are purchased from a supplier 100 miles away for $16 each and the lead time is 2 days. The holding cost per bracket per year is $1.60 (10% of the unit cost) and the annual ordering cost per order is $18.50. There are 240 working days per year. Possible future decision to make in-house: Ross White is reconsidering his decision of buying the brackets and is considering making the brackets in-house. He has determined the set up costs would be $24.50 in machinist time and lost production time. Forty eight brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor and materials) of producing one bracket would be $14.85. The holding cost would be 10% of the cost. a. What is the EOQ given Ross' current decision to buy the brackets? What is the total…
A regional supermarket is open 360 days a year. Daily use of cash register tapes is 15 rolls. The purchase price of the tape is $ 2 and inventory carrying cost is 60 cents per roll a year. Ordering cost is $ 20 per order. The order replenishment lead time is 7 days. What is the Order Point (re-order point) assuming demand is known and constant?
A company stocks an item that is consumed at the rate of 20 units each day. Every time an order is placed for new supply, $ 100 must be paid. A unit inventory held in stock will cost $ 0.15. (a) What is the economic order quantity (EOQ)? (b) What is the cycle time for the EOQ? (c) What is the total cost for the EOQ? (d) What is the total cost if the order quantity is 300 more than EOQ? (e) What is the optimum number of orders (rounded to the closest integer) that the company has to place each year? Assume that the company has a standing policy of not allowing shortages in demand.
11.7 For an SKU, the standard deviation of demand during the lead time is 150 units, the annual demand is 10,000 units, and the order quantity is 750 units. Management says it will tolerate only one stockout per year. What safety stock should be carried? What is the average inventory? If the lead time is 2 weeks, what is the order point?
Jean-Ma rie Bourjolly's restau rant has the followinginventory items that it orders on a weekly basis: a) Which is the most expensive item, using annual dollar volume?b) Which are C items?c) What is the annual dollar volume for all 20 items?
4. (Inventory Management - Part 2) An item has a unit purchase cost of $50, and an inventory-carrying rate per period of 0.02. The additional data for this product is given below: Period Demand (units) Fixed Cost (S/order) (i) (ii) 1 75 100 2 0 110 3 65 100 Assuming no backordering is allowed, answer the followings: (a) Check whether the demand is lumpy or not. (b) Apply the following heuristics on the problem given above. Period Order Quantity 4 40 105 5 90 100 Silver-Meal (iii) Part-Period Balancing (c) Which of the solutions obtained in part (b) do you select? (d) Draw a network diagram to illustrate the given lot sizing problem, and calculate the cost values for each are on the network. (e) Apply the Wagner-Whitin algorithm to determine the optimal order quantities, the optimal inventory levels, and the minimum sum of the ordering and inventory carrying costs.
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03) Halifax Souvenir Company currently orders 500 units four times each year. Each order costs $12 and each unit costs $1.20 per year to carry. On average, it takes 5 days to receive an order from the supplier. The company operates 250 days per year. Required: 1. What is the EOQ? 2. Calculate total annual inventory cost under EOQ. 3. What is the current inventory cost? 4. What is the re-order point?
Use ABC analysis to determine the items deserving mostattention and tightest inventory control
Develop an EOQ solution and calculate total relevant costs for the data in the preceding table.
The electrolyte drink for our beloved NMSU soccer team average normally distributed demand of 5 units and a standard deviation of 1 unit. Lead time for replenishment is fixed at four days. (a) What is the reorder point if there is no safety stock? (b) What is the reorder point if the service level is 80 percent? (c) How much more safety stock is required if the service level is raised from 80 percent to 90 percent?
Please show work so I can understand it. Given this information: •Expected demand during lead time = 800 units • Standard deviation of lead time demand = 40 units Assuming that lead time demand is distributed normally. The risk of stockout is 5 percent during lead time (a) What amount of safety stock is appropriate? (b) Calculate ROP

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