OPERATION MANAGEMENT
2nd Edition
ISBN: 9781260242423
Author: CACHON
Publisher: MCG
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Chapter 1, Problem 15PA
Summary Introduction
To determine: The operational decision correspond to the convenience of the customer utility function.
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The Gilbert Air-Conditioning Company is considering the purchase of a special shipment of portable air conditioners manufactured in Japan. Each unit will cost Gilbert $75, and it will be sold for $125. Gilbert
does not want to carry surplus air conditioners over until the following year. Thus, all surplus air conditioners will be sold to a wholesaler for $45 per unit. Assume that the air conditioner demand follows a
normal probability distribution with μ =20 and σ = 8.
(a) What is the recommended order quantity? (Round your answer to the nearest integer.)
Q* =
(b) What is the probability that Gilbert will sell all units it orders? (Round your answer to two decimal places.)
P(sell all) =
Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation, which is operated at a constant rate, will require
1,000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $24 per order, the unit cost is $2.20 per component, and annual holding costs are 15% of the
value of the inventory. Westside has 250 working days per year and a lead time of 5 days.
(a) What is the EOQ for this component? (Round your answer to the nearest integer.)
components
(b) What is the reorder point?
(c) What is the cycle time (in days)? (Round your answer to two decimal places.)
days
(d) What is the total annual holding cost (in $) associated with your recommended EOQ? (Round your answer to two decimal places.)
$
What is the total annual ordering cost (in $) associated with your recommended EOQ? (Round your answer to two decimal places.)
Brenda opened a pool and spa store in a lively shopping mall and finds business to be booming but she often stocks out of key items customers want. She decides to experiment with inventory control methods, such as using a continuous review (fixed-order quantity) and/or periodic review (fixed-order period) system. The 28-ounce bottle of Super Algaecide (SA) is a high margin SKU, but it stocks out frequently. Ten SA bottles come in each box, and she orders boxes from a vendor 160 miles away. Brenda is busy running the store and seldom has time to review store inventory status and order the right quantity at the right time. She collected the following data:
Demand = 10 boxes per week
Store open = 48 weeks/year
Order cost = $36/order
Lead-time = 5 weeks
Item cost = $72/box
Std. deviation in weekly demand = 8
Inventory-holding cost = 25 percent year
Service level = 90 percent
What is the economic order quantity (EOQ) rounded to the next highest number? Round to the…
Chapter 1 Solutions
OPERATION MANAGEMENT
Ch. 1 - Prob. 1CQCh. 1 - Prob. 2CQCh. 1 - Prob. 3CQCh. 1 - Prob. 4CQCh. 1 - Prob. 5CQCh. 1 - Prob. 6CQCh. 1 - Prob. 7CQCh. 1 - Prob. 8CQCh. 1 - Prob. 9CQCh. 1 - Prob. 1PA
Ch. 1 - Prob. 2PACh. 1 - Prob. 3PACh. 1 - Prob. 4PACh. 1 - Prob. 5PACh. 1 - Prob. 6PACh. 1 - Four regional less-than-truckload (LTL) carriers...Ch. 1 - Prob. 8PACh. 1 - Prob. 9PACh. 1 - Prob. 10PACh. 1 - Prob. 11PACh. 1 - Prob. 12PACh. 1 - Prob. 13PACh. 1 - Prob. 14PACh. 1 - Prob. 15PACh. 1 - Prob. 16PACh. 1 - Prob. 17PA
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