Cassorla’s Clothes sells a large number of white dress shirts. The shirts, which bear the store label, are shipped from a manufacturer in New York City. Hy Cassorla, the proprietor, says, “I want to be sure that I never run out of dress shirts. I always try to keep at least a two months’ supply in stock. When my inventory drops below that level, I order another two-month supply. I’ve been using that method for 20 years, and it works.” The shirts cost $6 each and sell for $15 each. The cost of processing an order and receiving new goods amounts to $80, and it takes three weeks to receive a shipment. Monthly demand is approximately normally distributed with mean 120 and standard deviation 32. Assume a 20 percent annual interest rate for computing the holding cost. a) What value of Q and R is Hy Cassorla sing to control the inventory of white dress shirts? b) What fill rate (Type 2 service level) is being achieved with the current policy? c) Based on a 99 percent fill rate criterion, determine the optimal values of Q and R that he should be using. (Assume four weeks in a month for your calculations.)
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Problem #2
Cassorla’s Clothes sells a large number of white dress shirts. The shirts, which bear the store label,
are shipped from a manufacturer in New York City. Hy Cassorla, the proprietor, says, “I want to be
sure that I never run out of dress shirts. I always try to keep at least a two months’ supply in
stock. When my inventory drops below that level, I order another two-month supply. I’ve been
using that method for 20 years, and it works.”
The shirts cost $6 each and sell for $15 each. The cost of processing an order and receiving new
goods amounts to $80, and it takes three weeks to receive a shipment. Monthly demand is
approximately
percent annual interest rate for computing the holding cost.
a) What value of Q and R is Hy Cassorla sing to control the inventory of white dress shirts?
b) What fill rate (Type 2 service level) is being achieved with the current policy?
c) Based on a 99 percent fill rate criterion, determine the optimal values of Q and R that he
should be using. (Assume four weeks in a month for your calculations.)
d) Determine the difference in the average annual holding and setup costs between the
policies in parts (b) and (c).
e) Estimate how much time would be required to pay for a $25,000 inventory control
system, assuming that the dress shirts represent 5 percent of Hy’s annual business and
that similar savings could be realized on the other items as well
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