**Rocky Mountain Tire Center Inventory Management** The Rocky Mountain Tire Center manages the sale of 6,000 go-cart tires annually. Here are the details regarding the ordering and holding costs: - **Ordering Cost**: Each order costs $40. - **Holding Cost**: Equivalent to 50% of the tire purchase price annually. - **Tire Purchase Prices**: - $23 per tire for orders fewer than 200 tires - $18 per tire for orders between 200 and 4,999 tires - $16 per tire for orders of 5,000 tires or more **Questions and Solutions:** a) **Optimal Order Quantity** - Determination: Rocky Mountain’s optimal order quantity is 231 units. b) **Total Cost of Policy** - Determination: The total annual cost of ordering the optimal order size is not calculated in the provided text. This analysis assists in identifying the balance between order frequency and costs to optimize inventory management for the Tire Center.

Rocky Mountain Tire Center Inventory Management The Rocky Mountain Tire Center manages the sale of 6,000 go-cart tires annually. Here are the details regarding the ordering and holding costs: - Ordering Cost: Each order costs $40. - Holding Cost: Equivalent to 50% of the tire purchase price annually. - Tire Purchase Prices: - $23 per tire for orders fewer than 200 tires - $18 per tire for orders between 200 and 4,999 tires - $16 per tire for orders of 5,000 tires or more Questions and Solutions: a) Optimal Order Quantity - Determination: Rocky Mountain’s optimal order quantity is 231 units. b) Total Cost of Policy - Determination: The total annual cost of ordering the optimal order size is not calculated in the provided text. This analysis assists in identifying the balance between order frequency and costs to optimize inventory management for the Tire Center.

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...

See similar textbooks

Similar questions

Please do not give solution in image format thanku
A gift shop sells 400 boxes of scented candles a year. The ordering cost is $50 for scented candles, and holding cost is $25 per box per year. What is the economic order size for scented candles?
Paulin’s muffler shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information table to determine the optimal inventory target level (or order-up to level). Annual demand 3,910 mufflers ordering cost $75 per order S/D of daily demand 6 mufflers/wk. day service probability 87% Item cost $ 27.00 per muffler lead time 2 wk. Days Annual holding cost 36 % of item value wk. Days 230 per year Review period 18 working days What is the optimal target levels (order up to levels) use excels NORMSINVI() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round value 2 decimal places and final answer to the nearest whole number If the service probability is 90%, the optimal target level will increase, decrease or…
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.80 per stone for quantities of 600 stones or more, $9.20 per stone for orders of 400 to 599 stones, and $9.70 per stone for lesser quantities. The jewelry firm operates 230 days per year. Usage rate is 16 stones per day, and ordering costs are $45.a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost. (Do not round intermediate calculations, except for order quantities which should be rounded to the nearest whole number. Round your final answer to the nearest whole number.) b. If annual carrying costs are 20 percent of unit cost, what is the optimal order size? (Do not round intermediate calculations, except for order quantities which should be rounded to the nearest whole number. Round your final answer to the nearest whole number.) c. If lead time is 3 working days, at what point should the company reorder? (Do…
Annual demand (D) is 49,000 units. Ordering Cost (S) is $1,000 per order. Holding cost (H) is $2 per unit per year. Find economic order quantity (Q*). 7,000 units 49,000,000 units 4,950 units 3,500 units 4,083 units
Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 3,000 rolls. The cost per roll is $1,000, and the annual holding cost is 28 percent of the cost. Each order costs $75. Part 2 a. How many rolls should Yellow Press order at a time? Yellow Press should order enter your response here rolls at a time. (Enter your response rounded to the nearest whole number.) Part 3 b. What is the time between orders? (Assume 200 workdays per year.) The time between orders is enter your response here days. (Enter your response rounded to one decimal place.)
If Sarah wants to minimize inventory holding and ordering costs, how much Palm oil should she purchase with each order (in kgs)?
If annual demand is 12,000 units, annual holding cost is $15 per unit, and setup cost per order is $25, what is the EOQ lot size?
EOQ, reorder point, and safety stock Alexis Company uses 916 units of a product per year on a continuous basis. The product has a fixed cost of $60 per order, and its carrying cost is $3 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.)
Suppose you have been employed by Kam Steels Corporation as a financial manager. You want to change old inventory ordering system to the just-in-time inventory method. The shareholders and the CEO of the firm would like to know how the new would operate and the benefits and disadvantages of the just-in-time inventory method. By providing a high-quality argument, please explain how the new would operate and its benefits and disadvantages to the shareholders and the CEO of the firm.