The stationary shop estimates that the average demand for a popular ball-point pen is 12,000 pens per week with astandard deviation of 3,000 pens. The current inventory policy calls for replenishment orders of 156,000 pens. Theaverage lead time from the distributor is 5 weeks, with a standard deviation of 2 weeks. If management wants a 95percent cycle-service level, what should the safety stock be?101,118 pens41,181 pensO 41,118 pens101,110 pens

A small introduction about Reorder Point A reorder point (ROP) is the point at which your inventory…

Answered: The stationary shop estimates that the…

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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First Printing has contracts with legal firms in San Francisco to copy their court documents. Daily demand is almost constant at 11,100 pages of documents. The lead time for paper delivery is normally distributed with a mean of 1 day and a standard deviation of 1 day. A 95% service level is expected. Compute First's ROP. Refer to the standard normal table for z-values. The reorder point is documents (round your response to the nearest whole number). Z-Table Z 0.38 0.50 0.67 0.84 1.04 1.28 1.41 1.56 1.65 1.75 1.88 2.06 2.33 Print Pr(Z) 65 69 75 80 85 90 92 94 95 96 97 98 99 Done - X
A company has been approached by their supplier who would be willing to offer a discount of 5% on orders over 500 units. Information regarding current inventory costs is as follows: Holding cost per unit per annum 10% of purchase price Ordering costs = $2 per order Annual demand = 15,000 units Purchase price 200 units Identify which option is better for the company. $15 per unit Current EOQ quantity = = =
Based on available information, lead time demandfor PC jump drives averages 50 units (normally distributed),with a standard deviation of 5 drives. Management wants a97% service level.a) What value of Z should be applied?b) How many drives should be carried as safety stock?c) What is the appropriate reorder point?
Fresco Inc. manufactures sour pops annually which requires 0.4 kilograms of raw material. The company produces and sells 1,600, 000 sour pops annually. The cost to place a single order is $60 per hour which takes four (4) hours on average. The annual carrying cost of inventory is 4% per annum and currently, the company orders twenty (20) times per year. A major supplier has offered some incentives for bulk purchases and as the junior cost accountant you were asked to provide your professional opinion on the optimal order size. A 3% discount would be given if the entity doubles its current lot size. A further 2% would be given if the entity increased its order by two and a half times the current lot size. The material is currently bought from its supplier for $120 per kilogram. Required: (a) Calculate the Economic Order Quantity (EOQ). (b) Calculate the total cost based on the EOQ. (c) Calculate the total cost for each alternate order quantities, including the current policy. (d) What…
Regional Supermarket is open 360 days per year. Daily use of cash register tape averages 10 rolls. Usage appears normally distributed with a standard deviation of 2 rolls per day. The cost of order-ing tape is $1, and carrying costs are 40 cents per roll a year. Lead time is three days. a. What is the EOQ?b. What ROP will provide a lead time service level of 96 percent?
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.
7. Sam's Cat Hotel operates 52 weeks per year, 5 days per week, and uses a continuous review inventory system. It purchases kitty litter for $11.00 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. ≻Demand = 95 bags/week ≻Order cost = $57/order ≻Annual holding cost = 30 percent of cost ≻Desired cycle-service level=98 percent ≻Lead time = 1 week(s) (5 working days) ≻Standard deviation of weekly demand = 20 bags ≻Current on-hand inventory is 350 bags, with no open orders or backorders. a. What is the EOQ? (Enter your response rounded to the nearest whole number.) and (Enter your response rounded to one decimal place.) b. What should R be? (Enter your response rounded to the nearest whole number.) c. An inventory withdrawal of 10 bags was just made. Is it time to reorder? (is or is not)

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