Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 70 gallons of Purple Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Purple Paint from their supplier, they order 90 gallons at a price of $4.00 per gallon. [The company does not hold Safety Stock) It takes 2.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $35 per order. Holding Costs - 40% of the purchase price per gallon per year. What is the Total Annual Inventory Cost for the company's current policy? Reorder Point, ROP = dL + SS d Average Demand Rate per Time Period D Demand Rate per Year L= Average Lead time (time periods) Service Level 99.99% 99.90% 99.00% 95.00% z Value 3.719 3.090 2.326 1.645
Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of 70 gallons of Purple Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Purple Paint from their supplier, they order 90 gallons at a price of $4.00 per gallon. [The company does not hold Safety Stock) It takes 2.50 weeks to receive an order from the supplier. Administrative costs for Ordering paint have been estimated to be $35 per order. Holding Costs - 40% of the purchase price per gallon per year. What is the Total Annual Inventory Cost for the company's current policy? Reorder Point, ROP = dL + SS d Average Demand Rate per Time Period D Demand Rate per Year L= Average Lead time (time periods) Service Level 99.99% 99.90% 99.00% 95.00% z Value 3.719 3.090 2.326 1.645
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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can you please solve this supply chain question
![Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all
the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of
70 gallons of Purple Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Purple
Paint from their supplier, they order 90 gallons at a price of $4.00 per gallon. [The company does not hold Safety Stock]
It takes 2.50 weeks to receive an order from the supplier.
Administrative costs for Ordering paint have been estimated to be $35 per order.
Holding Costs - 40% of the purchase price per gallon per year.
What is the Total Annual Inventory Cost for the company's current policy?
Reorder Point, ROP = dL + SS
d
Average Demand Rate per Time Period
D Demand Rate per Year
L = Average Lead time (time periods)
SS= Safety Stock = z dal
Q-Order Quantity
H Holding Cost Per Year Per Unit
S Ordering/Setup Cost Per Order
Total Annual Inventory Cost =
Service Level
99.99%
99.90%
gal Lo
(Assuming Lead Time is constant as in Periodic review)
Standard Deviation of the demand
z= Number of Standard deviations corresponding to a service level
EOQ
D
Economic Order Quantity, EOQ=
Orders TBO=
99.00%
95.00%
90.00%
85.00%
80.00%
z Value
3.719
3.090
2.326
1.645
1.282
1.036
0.842
Average Inventory Level = Q/2 + SS
(H+)S+H(SS)
2DS
H
Time Between](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4443701b-496e-42a6-91fc-6b9255dbe93e%2F9b9b3006-df01-4bdf-ba4a-c898310891fd%2Fkp0rwmb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Using a computerized Inventory Management System, a Paint Supply Store franchise continuously monitors the inventory of all
the paint located at each of their 15 stores and their distribution warehouse. The Paint Supply Store franchise sells an average of
70 gallons of Purple Paint every week (for 52 weeks per year). Their current policy is that when they place an order for Purple
Paint from their supplier, they order 90 gallons at a price of $4.00 per gallon. [The company does not hold Safety Stock]
It takes 2.50 weeks to receive an order from the supplier.
Administrative costs for Ordering paint have been estimated to be $35 per order.
Holding Costs - 40% of the purchase price per gallon per year.
What is the Total Annual Inventory Cost for the company's current policy?
Reorder Point, ROP = dL + SS
d
Average Demand Rate per Time Period
D Demand Rate per Year
L = Average Lead time (time periods)
SS= Safety Stock = z dal
Q-Order Quantity
H Holding Cost Per Year Per Unit
S Ordering/Setup Cost Per Order
Total Annual Inventory Cost =
Service Level
99.99%
99.90%
gal Lo
(Assuming Lead Time is constant as in Periodic review)
Standard Deviation of the demand
z= Number of Standard deviations corresponding to a service level
EOQ
D
Economic Order Quantity, EOQ=
Orders TBO=
99.00%
95.00%
90.00%
85.00%
80.00%
z Value
3.719
3.090
2.326
1.645
1.282
1.036
0.842
Average Inventory Level = Q/2 + SS
(H+)S+H(SS)
2DS
H
Time Between
Transcribed Image Text:O $9318.40
$1433.56
O $316.60
O $1487.56
O $963.22
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