What order quantity should be used? b. What reorder point should be used? c. What is the total annual cost for this inventory system?
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Osprey Sports stocks everything that a musky fisherman could
want in the Great North Woods. A particular musky lure has
been very popular with local fishermen as well as those who
buy lures on the Internet from Osprey Sports. The cost to place
orders with the supplier is $30/order; the demand averages
4 lures per day, with a standard deviation of 1 lure; and the in-
ventory holding cost is $1.00/lure/year. The lead time from the
supplier is 10 days, with a standard deviation of 3 days. It is im-
portant to maintain a 97 percent cycle-service level to properly
balance service with inventory holding costs. Osprey Sports is
open 350 days a year to allow the owners the opportunity to
fish for muskies during the prime season. The owners want to
use a continuous review inventory system for this item.
a. What order quantity should be used?
b. What reorder point should be used?
c. What is the total annual cost for this inventory system?
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- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.Osprey Sports stocks everything that a musky fisherman couldwant in the Great North Woods. A particular musky lure hasbeen very popular with local fishermen as well as those whobuy lures on the Internet from Osprey Sports. The cost to placeorders with the supplier is $30/order; the demand averages4 lures per day, with a standard deviation of 1 lure; and the in-ventory holding cost is $1.00/lure/year. The lead time from thesupplier is 10 days, with a standard deviation of 3 days. It is im-portant to maintain a 97 percent cycle-service level to properlybalance service with inventory holding costs. Osprey Sports isopen 350 days a year to allow the owners the opportunity tofish for muskies during the prime season. The owners want touse a continuous review inventory system for this item.a. What order quantity should be used?b. What reorder point should be used?c. What is the total annual cost for this inventory system?Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms: Order 1-100 bags, and the price is $6.00 a bag. Order 101 or more and the price is $4.50 a bag. Annual demand is 630, fixed ordering costs are $9 per order, and the per bag holding cost is estimated to be around $2 per year. What order quantity should Ollah order, based on the volume discount? Is this different from the EOQ? if so how could this be? please show calculations.
- Coffee Company uses 800 units of a product per year on a continuous basis. The product has a Fixed Cost of $50 per order, and its carrying cost is $2 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. Show Computations and Explanations. The EOQ = 200 Units The Average Level of Inventory = 92 Units The Reorder Point = 33 Units A. Indicate if the Variable Change if the firm does not hold the Safety Stock. Variable: Ordering Cost (Format: Change or Do not Change) B. Indicate if the Variable Change if the firm does not hold the Safety Stock. Variable: Carrying Cost (Format: Change or Do not Change) C. Indicate if the Variable Change if the firm does not hold the Safety Stock. Variable: Total Inventory Cost (Format: Change or Do not Change)The mythical Own Distributors has an annual demand of 2,000 units for itshandheld security wands. The average cost of the handheld security wand isUS$140. Carrying cost is 18% of the unit cost of the security wand. Orderingcosts are US$30 per order. If the company orders in quantities of 500 or more,it can get a 6% discount on the unit cost of the security wand. Should the OwenDistributors take the quantity discount?Joe Henry's machine shop uses 2,460 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand 2,460 Holding cost per bracket per year $1.55 Order cost per order $19.50 Lead time 2 days Working days per year 250 Part 2 a) What is the EOQ? enter your response here units (round your response to two decimal places). Part 3 b) What is the average inventory if the EOQ is used? enter your response here units (round your response to two decimal places). What would be the annual inventory holding cost? $enter your response here (round your response to two decimal places). Part 4 c) Given the EOQ, how many orders will be made annually? enter your response here orders (round your response to two decimal places). What would be the annual order cost? $enter your response here (round…
- Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms: Order 1-100 bags, and the price is $6.00 a bag. Order 101 or more and the price is $4.50 a bag. Annual demand is 630, fixed ordering costs are $9 per order, and the per bag holding cost is estimated to be around $2 per year. What is the economic order quantity for the bags? please show calculationsA microbrewery purchases malt for production. The supplier charges $35 for delivery (no matter how much is delivered) and $1.20 per gallon. Annual holding cost is 35% of the price per gallon. Usage is 250 gallons/week. d) If order quantity is 2500 gallons, what is the sum of the ordering and holding costs PER GALLON? e) If orders are for EOQ amount, what is the annual cost of the inventory system as a percentage of the annual purchase cost?Golden Crust Bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags ayear. Preparing an order and receiving a shipment of flour involves a cost of $10 per order.Annual holding costs are $75 per bag. Once an order for flour is placed, it takes six (6) days toreceive the order from the flour factory. The bakery operates 350 days per year.Calculate the following:(i) Economic Order Quantity(ii) Expected number of orders (Order Frequency)(iii) Average inventory(iv) The annual holding cost(v) The annual ordering cost(vi) The total annual cost of inventory management(vii) Reorder point(viii) If holding costs were to increase by $9 per year, how much would thataffect the minimum total annual cost?
- Sam's Cat Hotel operates 50 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $12.00 per bag. The following information is available about these bags: > Demand = 95 bags/week > Order cost = $50.00/order > Annual holding cost = 20 percent of cost > Desired cycle-service level = 80 percent > Lead time =5 weeks (30 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 95 bags is incorrect and actual demand averages only 75 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)Two delivery options are available for delivering 50 boxes. The annual holding cost is 30 % of the cost. Assume 365 days per year. 2-day delivery option costs $300 while 6-day delivery option costs $100. Determine a minimum unit cost for a box for which 2-day delivery alternative would be least costly? a. 1217 b. 405.6 c. 811.1 d. 608.3Hi Tech Corporation (HTC) expects to order 295,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $32; and the firm’s inventory carrying costs is equal to 18 percent of the purchase price. EOQ=2309.75. If HTC is able to negotiate a reduction in the fixed ordering costs to $250.00 per order, but HTC decides to carry a safety stock of 28 days of memory chip sales. With the reduced fixed ordering cost and the increased average inventory due to the safety stock carried, what is the additional total inventory costs due to the decision to balance out uncertainty by carrying the specified safety stock?
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