14. 12 The purchasing manager for the Atlantic Steel Company must determine a policy forordering coal to operate 12 converters. Each converter requires exactly 5 tons of coal per dayto operate, and the firm operates 360 days per year. The purchasing manager has determinedthat the ordering cost is $80 per order and the cost of holding coal is 20% of the average dollarvalue of inventory held. The purchasing manager has negotiated a contract to obtain the coalfor $12 per ton for the coming year.a. Determine the optimal quantity of coal to receive in each order. (Ans: 1200 tons)b. Determine the total inventory-related costs associated with the optimal ordering policy(do not include the cost of the coal). (Ans: TC= $2880)c. If 5 days of lead time are required to receive an order of coal, how much coal should be onhand when an order is placed? (Ans= R=300 tons)

Economic order quantity is the optimal quantity that the business should purchase or buy so that…

Answered: a. Determine the optimal quantity of…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Subject: Materials Management and Inventory Systems Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its 1-irons, which have the following characteristics: Demand (D) = 2,000 units/year, normally distributed Standard deviation of weekly demand = 3 units Ordering cost = $ 50 /order Holding cost (H) = $ 6.00/unit per year Desired service level = 90 % Lead time (L) = 5 weeks If the company uses a periodic review system, what should the review period (P) be (in weeks)? Pick the closest answer.
37 Buffer stock is the level of stock: Select one: a. Level at which ordering process should start b. Half of maximum stock c. Maximum stock in inventory d. Minimum stock level below which actual stock should not fall
10.4 A company wishes to establish an EOQ for an item for which the annual demand is $800,000, the ordering cost is $32, and the cost of carrying inventory is 20%. Calculate the following: a. The EOQ in dollars. b. Number of orders per year. c. Cost of ordering, cost of carrying inventory, and total cost. d. Compare your answers to those in problem 10.3.
12 Which of the following is NOT an assumption of the economic order quantity model shown below? Select one: a. Demand is known, constant, and independent. b. Lead time is known and constant. c. Production and use can occur simultaneously. d. The only variable costs are setup cost and holding (or carrying) cost. e. Quantity discounts are not possible.
Alpha company uses 20,000 loads of lumber per year. A load of lumber costs $500 and the carrying cost is 10 percent of the unit cost. The cost to order is $200 per order and the lead-time is three working days. Assuming 200 working days. Determine working days between orders? Select one: a. 6 days b. 10 days c. 4 days d. 8 days
The following statements refer to the Economic Order Quantity (EOQ) model. Which of the following are true? I. The EOQ is found by minimizing the total demand function. II. Total annual purchasing costs affects the EOQ. III. The EOQ model takes the timing of reordering into account.
16 Brooke Army Medical Center dispenses 390,000 bottles of brand name pharmaceutical annually. The optimal safety stock (which is on hand initially) is 1,000 bottles. Each bottle costs the center $10, inventory carrying costs are 30%, and the cost of placing an order with its supplier is $175. I What is the economic order quantity? Format is x,xxx (number only) What is the maximum inventory for this medication? Format is x,xxx How often must the center order (in days)? Format is xx days or x days How many orders of this pharmaceutical will need to be placed each year? Format is x or xx (number only)
Abey Kuruvilla, of Parkside Plumbing, uses 1,230 of a certain spare part that costs $24 for each order, with an annual holding cost of $25. Part 2 a) Calculate the total cost for order sizes of 25, 40, 50, 60, and 100 (round your responses to two decimal places). Order Size Total Cost ($) 25 enter your response here 40 enter your response here 50 enter your response here 60 enter your response here 100 enter your response here b) What is the economic order quantity? units (round your response to two decimal places).
53. Average demand for a particular item is 1,200 units per year. It costs $100 to place an ordem for this item, and it costs $24 to hold one unit of this item in inventory for one year. If the fixed order-interval model is chosen in this instance, how often (on average) will this item be ordered a) Once a month b) Once every other month c) Twice a month d) Twice every three months e) Three times every two months 54. The EOQ model is most relevant for which one of the following? a) Ordering items with dependent demand b) Determination of safety stock c) Ordering perishable items d) Determining fixed interval ordering quantity e) Determining fixed order quantity 55. What type of process would a paper mill be most likely to use? a) Continuous flow b) Project c) Job shop d) Flow shop 56. The transportation model method that is used to evaluate location alternatives minimizes t a) sources b) destinations c) capacity d) shipping costs
With a normal demand and normal lead-time, increasing the order lead-time results in which of the following? Lower expected costs. Higher service levels. Higher stockout probability. All of the above.

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