Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows: Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (E) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50 500+ 30.75 Vendor 3 Vendor 4 Quantity Price/LB (£) Quantity Price/LB (£) 34.50 1-199 34.25 1-99 200-399 33.00 100-199 33.75 400+ 31.00 200-399 32.50 400+ 31.10 I a) What quantity should be ordered, and which supplier should be used? b) Discuss factor(s) should be considered besides total cost.

Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows: Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (E) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50 500+ 30.75 Vendor 3 Vendor 4 Quantity Price/LB (£) Quantity Price/LB (£) 34.50 1-199 34.25 1-99 200-399 33.00 100-199 33.75 400+ 31.00 200-399 32.50 400+ 31.10 I a) What quantity should be ordered, and which supplier should be used? b) Discuss factor(s) should be considered besides total cost.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where bothtemperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holdingcost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows:SEE PHOTO ATTACHED:What quantity should be ordered, and which supplier should be used?
Emery Pharmaceutical uses an unstable chemicalcompound that must be kept in an environment where both temperatureand humidity can be controlled. Emery uses 800 poundsper month of the chemical, estimates the holding cost to be 50%of the purchase price (because of spoilage), and estimates ordercosts to be $50 per order. The cost schedules of two suppliers areas follows: a) What is the economic order quantity for each supplier?b) What quantity should be ordered, and which supplier should be used?c) What is the total cost for the most economic order size?d) What factor(s) should be considered besides total cost?
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Chris Sandvig Irrigation, Inc., has summarizedthe price list from four potential suppliers of an undergroundcontrol valve. See the accompanying table. Annual usage is2,400 valves; order cost is $10 per order; and annual inventory holding costs are $3.33 per unit.Which vendor should be selected and what order quantityis best if Sandvig Irrigation wants to minimize total cost?
Chris Sandvig Irrigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the table below. Annual usage is 700 valves; order cost is $10 per order; and annual inventory holding costs are $7.55 per unit. Vendor A Quantity 1-9 10-14 15-49 50-99 100-299 300+ Price $35.00 34.75 33.55 32.35 31.15 30.75 Vendor B Quantity 1-14 15-49 50-99 100-299 300+ Price $34.75 34.00 32.80 31.60 30.50 Vendor C Quantity 1-24 25-74 75-199 200+ Vendor C Vendor B Vendor D Price $34.50 33.75 32.50 31.10 Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost? Chris Sandvig Irrigation should order units at a time from (enter your response as a whole number). Vendor A Vendor D Quantity 1-74 75-199 200+ Price $34.25 33.00 31.00
1. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the EOQ. 2. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the total carrying cost. 3. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the total ordering cost. 4. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the number of orders required per year. 5. Minmax Processing Company has an average requirement of 5 boxes of…
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Chris Sandvig Irrigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the table below. Annual usage is 800 valves; order cost is $7 per order; and annual inventory holding costs are $2.15 per unit. D Vendor A units at a time from Vendor C Vendor B Quantity 1-14 15-24 25-99 100-199 200-399 400+ Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost? Chris Sandvig Irrigation should order (enter your response as a whole number). Vendor A Price $35.00 34.75 33.55 32.35 31.15 30.75 Vendor D Vendor B Quantity 1-24 25-99 100-199 200-399 400+ Price $34.75 34.00 32.80 31.60 30.50 Vendor C Quantity 1-49 50-149 150-299 300+ Price $34.50 33.75 32.50 31.10 Vendor D Quantity 1-149 150-299 300+ Price $34.25 33.00 31.00
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Suppose that we would like to determine Reorder Point for the product. From the historical data the manager determined demand during lead-time for that product fits Normal distribution with a mean of 200 and standard deviation of 10 products. The maximum stock out risk is 10%. Answer the following questions according to the (Q, R) system. a) Find the safety stock if the lead time is 2 weeks. b) Find the reorder point. c) Find the reorder point if the stock out risk decreases to 1%. Comment on the result.
IL Data related to the inventories of Metro Supply are presented below: 困 Surgical Equipment $ 260 170 240 Surgical Supplies $ 120 Rehab Rehab Selling price Cost Equipment S 340 Supplies $ 165 90 250 235 162 Replacement cost Costs to sell Normal gross profit ratio 80 158 30 25 10 30% 30% 30% 20% *Show your computation! If not, no credit A) In applying the lower of cost or market rule, the inventory of surgical equipment would be valued at: B) In applying the lower of cost or market rule, the inventory of surgical supplies would be valued at: C) In applying the lower of cost or market rule, the inventory of rehab equipment would be valued at: D) In applying the lower of cost or market rule, the inventory of rehab supplies would be valued at:
PHL Manufacturing assembles security monitors. It purchases 900 black-and-white cathode ray tubes per month at $80 each. Ordering costs are $30, and annual carrying costs are 25 percent of the purchase price. - a) Determine the optimal quantity (4 points) - b) Find the total annual cost of ordering and carrying the inventory (2 points) - c) If the supplier offer a price of $79 per tube for ordering 1200 tubes in a lot, would you evaluate and advise PHL to take advantage of the offer?