An office supply company is trying to determine the order quantity for Mt. White fountain pensthat are sold to local executives. Annual demand is 5,000 units, and each pen costs the store$50. It costs $75 to place an order, and the inventory carrying cost rate is 30% of item's value.Formulate ONLY the objective function for this problem. Let Q indicate the order quantity.Objectivefunction:

Given data is Annual demand (D) = 5000 units Unit cost = $50 Order cost (S)= $75 Holding cost (H) =…

Answered: An office supply company is trying to…

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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AAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3 e. Which alternative should be chosen based on the minimax regret criterion? f. Which alternative should be chosen using the expected monetary value (EMV) criterion? g. What is the expected value under perfect information (EVPI)? Show Work
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An electronic manufacturer in San Francisco receives its motherboards from a supplier in Hong Kong. The lead time for orders is 3 weeks. One of their board costs $16 per unit and the holding cost for this board is $0.5 per week. They manage their inventory to achieve a 97 percent in-stock probability. Weekly demand is for 150 boards with a standard deviation of 200. Use the following table when needed: In-stock probability 99% 98% 97% 96% Z value 2.33 2.05 1.88 1.75 a. How many boards do they have on on order on average? boards b.How many boards do they have on hand on average? boards c. For this board what is the total holding cost incurred per week? per week (Round your answer to 2 decimal places.) d.What is the holding cost they incur per board? per board
Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately$30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price perunit on an annual basis. Determine the optimal order quantity and the total annual cost.
Currently, a company places orders for diaries to give away as tokens for its customers. Each diary costs the company $137.50. It costs the company $0.65 to place an order for the diaries and $0.87 to carry each diary annually in its inventory. The suppliers wish to offer the company a deal on the cups, by having it pay $85 for each diary, but ONLY if the company orders in sizes of 500 instead of the usual amount. Annual demand for the cups is 8000. Should the company accept the deal?
An online footwear firm Shoe-n-co has four regional warehouses. Demand at each warehouse is normally distributed with a mean of 10,000 per week and a standard deviation of 2,000. Annual holding cost is 25%, and each unit of Prancs rubber shoes costs the company $10. Each order incurs an ordering cost of $1,000 (primarily from fixed transportation cost), and lead time is 1 week. The company wants the probability of stocking out to be no more than 5%. Assume 50 working weeks per year. Assuming that each warehouse operates independently, calculate the ROP parameter of the optimal continuous review policy. Assuming that each warehouse operates independently, calculate the Q parameter of the optimal continuous review policy. How much safety stock does each warehouse have?
The Warren Fischer Computer Corporation purchases 8000 transistors each year as components inminicomputers. The unit cost of each transistor is R10, and the cost of carrying each singletransistor in inventory for the year is R3. Ordering cost is R30 per order. Calculate the optimal orderquantity, the expected number of orders placed each year, the expected time between the orders?Assuming that fisher operates a 200-day working year.
A manufacturer of exercise equipment purchases pulleys from a supplier who lists these prices: less than 1,000, $5 each; 1,000 to 3,999, $4.95 each; 4,000 to 5,999, $4.90 each; and 6,000 or more, $4.85 each. Ordering cost is $50 per order, annual holding cost is 20 percent of purchase cost, and annual usage is 4,900 pulleys. Determine the order quantity that will minimize total cost.
"Nordlund Boat Company has been repairing, refitting, and building custom boats. for over 60 years in the Pacific Northwest." The company is located in Tacoma, Washington. One of the engine's most critical components is the exhaust manifolds. The company purchases this item from the best manufacturers in the world. TJ is the buyer in charge of managing this item. TJ's purchasing agent currently submits an order release for this item every 4 weeks. The company's annual demand is 400 units (2 units per working day). Nordlund's relatively low volume and quality focus, rather than volume focus, means the company cannot take advantage of quantity discounts. The supplier has agreed to deliver this item within 1 week following an order release. For this reason, Nordlund has never had a shortage of exhaust manifolds. The total time between the release date and date of receipt is 1 week or 5 working days. The accounting has generated the following inventory-related costs. Procurement costs…
Algro Inc. keeps a wide range of parts and materials on hand for use in its production processes. Management has recently had difficulty managing parts inventory as demand for its finished goods has increased; they frequently run out of some critical parts while having an endless supply of others. They would like to classify their parts inventory according to the ABC approach to better control inventory. The following is a list of parts, along with their annual usage and unit value: Item Annual Unit Item Annual Unit Number Usage Cost Number Usage Cost 1 36 $350 2 510 30 3 50 23 4 300 45 5 18 1900 6 500 8 7 710 4 8 80 26 9 344 28 10 67 440 11 510 2 12 682 35 13 1216 95 50 14 10 3 15 820 1 KARAN2222222222 16 60 $610 17 120 20 18 270 15 19 45 50 20 19 3200 21 910 3 12 4750 23 30 2710 24 24 1800 25 870 105 26 244 30 27 750 15 28 45 110 29 46 160 30 165 25 a. Classify the inventory items according to the ABC approach using the dollar value of annual demand. b. Clearly explain why you…
A confectioner buys plastic boxes in bulk and uses them to pack chocolates. The annual requirement of these boxes is 1,200, and each box costs $30. The ordering and carrying costs are $10 per order and 20%, respectively. The supplier from whom the confectioner purchases these boxes sells them only in lots of 25, that is, you only purchase quantities in multiples of 25 boxes. If the supplier offers 2% discount on the cost of each box when the purchases are in quantities of 300 at a time, should the confectioner accept this offer?

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