esGarden Variety Flower Shop uses 930 clay pots a month. The pots are purchased at $3.90 each. Annual carrying costs per pot areestimated to be 10 percent of cost, and ordering costs are $10 per order. The manager has been using an order size of 2,000 flowerpots.a.What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearestwhole number. Round all other intermediate calculations and your final answer to 2 decimal places.)Additional annual costb.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 2,000)? (Use therounded order quantity from Part a. Round your final answer to the nearest whole percent.)About%of the storage space would be needed.Check my

Answered: Garden Variety Flower Shop uses 930…

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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A manufacturer buys cardboard boxes from a supplier. The annual demand is 40,000 boxes and is uniformly distributed. The boxes cost $5 each. The estimated order cost is $10, and the carrying cost rate is 20% per year. What is the EOQ and what is the annual order and carrying cost? How many times a year are orders placed, and what is the average time, in weeks, between orders? Using the answer from (b), if you round the average time between orders to the nearest week, what should the order quantity be? Would you recommend using this order quantity and time interval? Suppose that the actual demand turns out to be 80,000 boxes instead of 40,000 boxes.If you had used the EOQ from the (a), what would be the annual order and carrying cost be?
University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from one of the pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of 2,000 capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be 800 capsules. It takes f ive days for the order to arrive. University Drug would like to satisfy 99 percent of the prescriptions. The salesperson just arrived, and there are currently 25,000 capsules in stock.How many capsules should be ordered?
Potter Machine Company expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with an inventory carrying cost of $0.70 per unit. What is the optimal order size?
Discuss what is meant by ABC analysis of inventory.Name several measures that can determine ABCstatus
Manipulation Manufacturing Company uses 1,000 units of Chip annually in its production. Order costs consist of P10 for placing a long-distance call to make the order and P40 for delivering the order by truck to the company warehouse. Each Chip costs P100 and the carrying costs are estimated at 15.625% of the inventory cost. If the EOQ for Chip is 80 and the total ordering cost is P625. Compute for the Total Carrying Costs.
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The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase $550 order Relevant carrying costs per year for each package: Required annual return on investment Required other costs per year 17% $7 Annual demand is 30,000 packages per year. The purchase price per package is $53. Which of the following statements is true of Allianz's EOQ system costs? O At EOQ, the annual relevant ordering costs is exactly the half of annual relevant carrying costs. O At EOQ, the annual relevant carrying costs is exactly the half of the annual relevant total costs. O At EOQ, the annual relevant carrying costs is higher than the annual relevant ordering costs. O At EOQ, the annual relevant carrying costs is equal to the annual relevant total costs.
The Hodson Gallery and Art Museum distributes a printed guide for its visitors. There are about 18000 visitors per year. Holding costs for the brochures are 20% and it costs $30 to place an order with the printer. A. Assuming the cost for each guide is $2.50, how many should be printed at a time? B. Now assume the printer has offered the following discount schedule: Category Order Size Unit Cost 1 0 - 1499 $2.50 2 1500 - 2999 $2.20 3 3000 and over $1.80 Now how many brochures should be printed at a time?
Demand is Normally distributed with mean of 14 per week and a weekly variance of 3. The ordering cost is $81.84. Lead time is 5 weeks. Shortages cost an estimated $1.12 per unit short to expedite orders to appease customers. The holding cost is $5.07 per week. Estimate the stockout risk if the target service level is 0.89. (Enter a number with two decimal places, e.g. 0.12)
Define each of the following in your own words and as a formula:a. Annual ordering cost.b. Annual carrying cost.c. Total annual cost.

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