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Chapter 4. Tyler decided to open a bakery because everyone he knew told him that his baked goods were "out of this world." He had a little bit of a business school background because he got his Bachelor's from SPS at UIW recently. He remembered his teacher telling him that inventory models can be used for both the raw materials as well as the finished products for a business like his. So, he decided to see if he could use the basic EOQ model for identifying how much quantity to order of raw materials such as eggs, flour, sugar, etc. To get started, he decided to create a model for flour based on the information he had on hand regarding potential costs as follows: • Usage per month 100 lbs • Purchase cost $1 per Ib. • Order cost $10.00 per order sent • Annual Holding Rate 10% of purchase price per Ib. • 52-week year 300 working days per year • Lead time 2 days Fill in the following table based on this information: Optimal Inventory Policy Economic Order Quantity Q Ibs. Annual Inventory dollars Holding Cost H Annual Ordering Cost dollars lo

Chapter 4. Tyler decided to open a bakery because everyone he knew told him that his baked goods were "out of this world." He had a little bit of a business school background because he got his Bachelor's from SPS at UIW recently. He remembered his teacher telling him that inventory models can be used for both the raw materials as well as the finished products for a business like his. So, he decided to see if he could use the basic EOQ model for identifying how much quantity to order of raw materials such as eggs, flour, sugar, etc. To get started, he decided to create a model for flour based on the information he had on hand regarding potential costs as follows: • Usage per month 100 lbs • Purchase cost $1 per Ib. • Order cost $10.00 per order sent • Annual Holding Rate 10% of purchase price per Ib. • 52-week year 300 working days per year • Lead time 2 days Fill in the following table based on this information: Optimal Inventory Policy Economic Order Quantity Q Ibs. Annual Inventory dollars Holding Cost H Annual Ordering Cost dollars lo

Practical Management Science
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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Chapter 4: Tyler decided to open a bakery because everyone he knew told him that his baked goods were "out of this world." He had a little bit of a business school background because he got his Bachelor's from SPS at UIW recently. He remembered his teacher telling him that inventory models can be used for both the raw materials as well as the finished products for a business like his. So, he decided to see if he could use the basic EOQ model for identifying how much quantity to order of raw materials such as eggs, flour, sugar, etc. To get started, he decided to create a model for flour based on the information he had on hand regarding potential costs as follows: - Usage per month 100 lbs - Purchase cost $1 per lb. - Order cost $10.00 per order sent - Annual Holding Rate 10% of purchase price per lb. - 52-week year 300 working days per year - Lead time 2 days Fill in the following table based on this information: --- **Optimal Inventory Policy** | | | |-----------------------------|----------------| | Economic Order Quantity Q* | __________ lbs.| | Annual Inventory Holding Cost H | __________ dollars | | Annual Ordering Cost O | __________ dollars | | Total Annual Cost TC | __________ dollars | | Maximum Inventory Level Q | __________ lbs. | | Average Inventory Level Q/2 | __________ lbs. | | Reorder Point r | __________ lbs. left | | Number of Orders Per Year (D/Q*) | __________ | | Cycle Time (Days) T | __________ days | --- Please fill in the values based on the provided information to complete the EOQ model calculations.
Transcribed Image Text:Chapter 4: Tyler decided to open a bakery because everyone he knew told him that his baked goods were "out of this world." He had a little bit of a business school background because he got his Bachelor's from SPS at UIW recently. He remembered his teacher telling him that inventory models can be used for both the raw materials as well as the finished products for a business like his. So, he decided to see if he could use the basic EOQ model for identifying how much quantity to order of raw materials such as eggs, flour, sugar, etc. To get started, he decided to create a model for flour based on the information he had on hand regarding potential costs as follows: - Usage per month 100 lbs - Purchase cost $1 per lb. - Order cost $10.00 per order sent - Annual Holding Rate 10% of purchase price per lb. - 52-week year 300 working days per year - Lead time 2 days Fill in the following table based on this information: --- **Optimal Inventory Policy** | | | |-----------------------------|----------------| | Economic Order Quantity Q* | __________ lbs.| | Annual Inventory Holding Cost H | __________ dollars | | Annual Ordering Cost O | __________ dollars | | Total Annual Cost TC | __________ dollars | | Maximum Inventory Level Q | __________ lbs. | | Average Inventory Level Q/2 | __________ lbs. | | Reorder Point r | __________ lbs. left | | Number of Orders Per Year (D/Q*) | __________ | | Cycle Time (Days) T | __________ days | --- Please fill in the values based on the provided information to complete the EOQ model calculations.
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