Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
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Textbook Question
Chapter 12, Problem 16DQ
When demand is not constant, the reorder point is a function of what four parameters?
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When demand is not constant, the reorder point is a function of what four parameters?
Xemex has collected the following inventory data for the six items that it stocks:
ITEM CODE
UNIT COST ($)
ANNUAL DEMAND (UNITS)
ORDERING COST ($)
CARRYING COST AS A PERCENTAGE OF UNIT COST
1
10.60
600
40
20
2
11.00
450
30
25
3
2.25
500
50
15
4
150.00
560
40
15
5
4.00
540
35
16
6
4.10
490
40
17
Lynn Robinson, Xemex’s inventory manager, does not feel that all of the items can be controlled. What ordered quantities do you recommend for which inventory product(s)?
Problem 20-30 (Algo)
It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for
the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A
perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data:
Cost per tire
Holding cost
Demand
50 each
25 percent of tire cost per year
1,100 рer year
Ordering cost
Standard deviation of daily demand
Delivery lead time
32 per order
7 tires
8 days
Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the
demand occurs 365 days per year.
a. Determine the order quantity. (Round your answer to the nearest whole number.)
Order quantity
75 tires
b. Determine the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not…
Chapter 12 Solutions
Principles Of Operations Management
Ch. 12 - Ethical Dilemma Wayne Hills Hospital in tiny...Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - What is the purpose of the ABC classification...Ch. 12 - Prob. 4DQCh. 12 - Explain the major assumptions of the basic EOQ...Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - What impact does a decrease in setup time hive on...
Ch. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Explain the following: All things being equal, the...Ch. 12 - Prob. 13DQCh. 12 - Prob. 14DQCh. 12 - Prob. 15DQCh. 12 - When demand is not constant, the reorder point is...Ch. 12 - Prob. 17DQCh. 12 - State a major advantage, and a major disadvantage,...Ch. 12 - L. Houts Plastics it a large manufacturer of...Ch. 12 - Prob. 2PCh. 12 - Jean-Mane Bourjollys restaurant has the following...Ch. 12 - Lindsay Electronics, a small manufacturer of...Ch. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - William Sevilles computer training school, in...Ch. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Matthew Liotines Dream Store sells beds and...Ch. 12 - Southeastern Bell stocks a certain switch...Ch. 12 - Lead time for one of your fastest-moving products...Ch. 12 - Annual demand for the notebook binders at Duncans...Ch. 12 - Thomas Kratzer is the purchasing manager for the...Ch. 12 - Joe Henrys machine shop uses 2,500 brackets during...Ch. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Cesar Rego Computers, a Mississippi chain of...Ch. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - M. P. VanOyen Manufacturing has gone out on bid...Ch. 12 - Chris Sandvig Irrigation, Inc., has summarized the...Ch. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Barbara Flynn is in charge of maintaining hospital...Ch. 12 - Prob. 42PCh. 12 - Authentic Thai rattan chairs (shown in the photo)...Ch. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Gainesville Cigar stocks Cuban agars that have...Ch. 12 - A gourmet coffee shop in downtown San Francisco is...Ch. 12 - Prob. 50PCh. 12 - Prob. 51PCh. 12 - Henrique Correas bakery prepares all its cakes...Ch. 12 - Prob. 53PCh. 12 - Prob. 1CSCh. 12 - Prob. 2CSCh. 12 - Prob. 3CSCh. 12 - Prob. 1.1VCCh. 12 - Prob. 1.2VCCh. 12 - Prob. 1.3VCCh. 12 - Prob. 1.4VCCh. 12 - Prob. 1.5VCCh. 12 - Prob. 1.6VCCh. 12 - Prob. 1.7VCCh. 12 - Prob. 2.1VCCh. 12 - Prob. 2.2VCCh. 12 - Prob. 2.3VCCh. 12 - Prob. 2.4VCCh. 12 - Inventory Control at Wheeled Coach Controlling...Ch. 12 - Prob. 3.2VCCh. 12 - Inventory Control at Wheeled Coach Controlling...
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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.arrow_forwardProblem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one Item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire Holding cost Demand Ordering cost Standard deviation of daily demand Delivery lead time Order quantity $ tires 50 each percent of tire cost per year Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year. a. Determine the order quantity. (Round your answer to the nearest whole number.) 15 1,100 per year $ 22 per order 4 tires 5 daysarrow_forwardWhy do we use "Specifications or bill of material" in the dependent inventory model?arrow_forward
- Walrus Company has the following information available concerning one of its inventory items: Cost of placing an order $30.00 Unit carrying cost per year $3.00 Annual unit demand 6,625 Safety stock 125 Average daily demand 25 Normal lead time in days 10 If there is a delay in shipping the item, approximately how many days can be covered by the safety stock? a.5 days b.110 days c.26 days d.31 daysarrow_forwardsniparrow_forwardCherylene Brown has asked you to help her determine the best ordering policy for a new product. The demand for the new product has been forecasted to be about 1,000 units annually. To help you get a handle on the carrying and ordering costs, Cherylene has given you the list of last year's costs. She thought that these costs might be appropriate for the new product. Cost Factor Taxes for the warehouse Receiving and incoming inspection New product development Acct. dept. costs to pay invoices Inventory insurance Product advertising Spoilage Sending purchasing orders Cost ($) 2,050 1,600 2,500 500 600 800 750 900 Cost Factor Warehouse supplies Research and development Purchasing salaries & wages Warehouse salaries & wages Pilferage of inventory Purchase order supplies Inventory obsolescence Purchasing dept. overhead Cost ($) 300 2,750 30,000 12,800 800 500 300 1,000 She also told you that these data were compiled for 10,000 inventory items that were carried or held during the year. You…arrow_forward
- For fixed order quantity inventory system, which of the following costs is increased when order size (Q) is increased? a) Setup cost b) Ordering cost c) Start-up quality cost d) Insurance cost e) Receiving inspection costarrow_forwardExplain why it is not necessary to include product cost (price or price time quanity in the EOQ model, but the quantity discount model requires this information ?arrow_forwardMaroons Medical Supplies, Inc. must order masks from its supplier in lots of 1 dozen boxes. Given the information provided below, complete the following table: Annual demand 26,000 dozen Cost per order placed P30 Carrying cost 20% Price per dozen P7.80 Order Size (Dozen) 250 500 1,000 2,000 13,000 26,000 Number of orders Average inventory Carrying cost Order cost Total cost 1. What is the EOQ? Please include/fill the table and solve for EOQ. Thank you so much!arrow_forward
- The retail shop averages demand of 100 chocolate chip cookies per day, with a 10 cookie standard deviation. Based on the previous chocolate chip production, lead time for reorder is 3 days (0 standard deviation) since there is no shipping involved. Management would like to ensure a 90% service level for its customers. Use Excel template to calculate the reorder point (ROP)arrow_forwardReorder Point Ordering: Average daily demand ( d) is 5 units with a std. dev. (od) of 1 unit. Average lead time ( LT) is 24 days with a std. dev. (OLT) of 1 day. The inventory manager wants to operate within 3 std. deviations (z = 3). Find the reorder point (ROP) and safety stock (S). ROP=141, SS=120 ROP=141, SS=21 ROP=120, SS=21 ROP=21, SS=141arrow_forward• The weekly demand for a product is 770 units. The standard deviation of daily demand is 10 units. The firm reviews its inventory every 28 days. Each order for the product arrives 9 days after placement. At the time of review, there are 10 units backorder. If 95 percent of all demand is to be satisfied from items in stock: a) How many units should be the safety stock? b) What's the product's inventory status? c) How many units should be ordered for this period?arrow_forward
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