Palin's Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system tomanage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level (ororder-up-to level).Ordering costService probabilityAnnual demand3,750mufflers$ 6092 %per ordermufflers per working dayper muffler% of item valueworking daysStandard deviation of daily demandItem cost$39.00working daysper yearLead time3Working daysAnnual holding costReview period3125020a. What is the optimal target level (order-up-to level)? (Use Excel's NORMSINV() function to find the correct critical value for thegiven a-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest wholenumber.)Optimal target levelb. If the service probability requirement is 92 percent, the optimal target level will:O Stay the sameDecreaseO Increase

Given, Annual demand D = 3750 Daily Demand d = 3750/250 = 15 per day Review Period T = 20 Lead time…

Answered: Palin's Muffler Shop has one standard…

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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Similar questions

1. The overall objective of inventory management is to achieve satisfactory levels of customer service by having sufficient quantities while keeping inventory costs reasonable. True or false
Dunstreet's Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on-hand. How many sheets should you order? Note: Use Excel's NORM.S.INV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.
A subcontracting firm Gamma Pharmaceuticals Ltd. located in Western India dealing with generic medicines operates 50 weeks per year. The following information is available regarding the major ingredient used for the medicine:Weekly Demand= 60 unitsStandard deviation of weekly demand = 9 unitsOrdering costs (Co) = Rs. 64/ orderHolding costs (Ch) = Rs.40/unit/yearCycle-service level = 90% (z-value = 1.28)Lead time = 2 weeksNumber of weeks per year = 50 weeksd) Using the fixed order quantity system to control inventory, calculate the EOQe) Compute the reorder point and state the order decision rulef) Compute the total variable cost of inventory.
If I have available inventory, I should accept whatever paying customer comes along. Select one: True False
ABC Company placed an order on December 1. It normally receives the order after 9 days. If the company has a normal usage of 10 units per day. What is the re-order point?
Inventory order is placed when 1)Only when projected or actual on hand stocks value is 2)positive Only when projected or actual on hand stocks are higher than the safety stock 3)Only when projected or actual stocks on hand is below zero. 4)None of these
Caring Hospital's dispensary reorders doses of a drug when the supply on hand falls to 18 units. Lead time for resupply is three days. Given the typical usage over the last 10 days, what service level is achieved with the hospital's reorder policy? (Hint. Use the following formula.) (Do not round intermediate calculations. Round your "z" value and final answer to 2 decimal places.) Use Table. ROP =dLT +2 (od) √LT Day Units 1 3 2 3 4 4 7 5 Service level Click here for the Excel Data File 5 5 % 6 6 7 4 8 3 9 4 10 5
Please do not give solution in image formate thanku Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $98, and the inventory carrying cost is $11 per unit per year. The average ordering cost is $31 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per year). A) What is the EOQ?B) What is the average inventory if the EOQ is used?C) What is the optimal number of orders per year?D) What is the optimal number of days in between any two orders?E) What is the annual cost of ordering and holding inventory?F) What is the total annual inventory cost, including cost of the 6,100 units?
Sam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…
Fush uses an average of 40 boxes of paper serviettes a day. The restaurant operates 260 days per year, storage and handling costs for the serviettes are $ 30 per year per box, and it costs approximately $60 to order and receive a shipment of serviettes. a. Calculating the order size would minimise the sum of annual ordering and carrying costs? b. compute the total annual costs using your size from part a?
Southern Markets, Inc. is considering the use of ABCanalysis to focus on the most critical SKUs in its inventory.Currently, there are approximately 20,000 different SKUswith a total dollar usage of $10,000,000 per year.a. What would you expect to be the number of SKUs and thetotal annual dollar usage for A items, B items, and C itemsat Southern Markets, Inc.? b. The following table provides a random sample of the unitvalues and annual demands of eight SKUs. Categorizethese SKUs as A, B, and C items.
The average expense of keeping inventory for an integrated circuit producer is 48 percent.What inventory keeping expense (in $) does an object cost $300 and has an estimated one-month inventory supply?

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