The 23,000-seat Air East Arena houses the local professional ice hockey, basketball, indoorsoccer, and arena football teams as well as various trade shows, wrestling and boxingmatches, tractor pulls, and circuses. Arena vending annually sells large quantities of softdrinks and beer in plastic cups with the name of the arena and the various team logos onthem. The local container cup manufacturer that supplies the cups in boxes of 100 hasoffered arena management the following discount price schedule for cups:Order Quantity (boxes)Price per Box2000-6999$477000-11,999434112,000-19,99920,000+38The annual demand for cups is 2.3 million, the annual carrying cost per box of cups is $1.90,and ordering cost is $320. Determine the optimal order quantity and total annual inventorycost.a. Find the economic order quantity Q* for each groupb. Find the total annual cost TC for each group for the values of Q* found in (a).c. From (a) and (b) state the economic order quantity that gives the minimum totalannual cost

Given data: D = Annual Demand = 2300000 Cups 100 Cups Per Box = 23000 Boxes O = Ordering Cost Per…

Answered: The 23,000-seat Air East Arena houses…

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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Eight Flags operates several amusement parks in the Midwest. The company stocks machine oil to service the machinery for the many rides at the parks. Eight Flags needs 30,000 gallons (D) of oil annually; the parks operate 50 weeks a year. Management is unsatisfied with the current supplier of oil and has obtained two bids from other suppliers. The data are contained in the following table. D i Annual Freight Costs Shipping Quantity (Q) (wks) Cost Supplier Sharps Winkler 5,000 $5,200 $5,400 Price/Unit Annual Holding Lead Time (L) Annual Administrative 10,000 15,000 (P) Cost/Unit (H) $3,600 $3,200 $3.70 $3.700 $3,400 $0.74 5 $4,000 $5,000 $3.90 $0.78 6 Which supplier and which shipping quantity will provide the lowest costs for Eight Flags? Using and a shipping quantity of is the lowest cost alternative, with annual total costs to Eight Flags of $. (Enter your response as an integer.)
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Costco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…
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