The manager of a car wash received a revised price list from the vendor who supplies soap, anda promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now thevendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. Thecar wash is open 360 days a year. Assume that daily usage is normal, and that it has a standarddeviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon.The revised price list (cost per gallon) is shown in the following table.Quantity Unit Price1−399 $2.00400−799 1.70800 + 1.62a. What order quantity is optimal?b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
The manager of a car wash received a revised price list from the vendor who supplies soap, and
a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the
vendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. The
car wash is open 360 days a year. Assume that daily usage is normal, and that it has a standard
deviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon.
The revised price list (cost per gallon) is shown in the following table.
Quantity Unit Price
1−399 $2.00
400−799 1.70
800 + 1.62
a. What order quantity is optimal?
b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent?
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