Operations Management: Sustainability and Supply Chain Management (12th Edition)

12th Edition

ISBN: 9780134130422

Author: Jay Heizer, Barry Render, Chuck Munson

Publisher: PEARSON

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Textbook Question

Chapter 12, Problem 49P

Question

•••• 12.40 A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (fixed cost = $16 per order), beans are always shipped from Hawaii within exactly 4 days. Per- pound annual holding costs for the beans are $3.

a. What is the economic order quantity (EOQ) for Kona coffee beans?
b. What are the total annual holding costs of stock for Kona coffee beans?
c. What are the total annual ordering costs for Kona coffee beans?
d. Assume that management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point (ROP) be?
e. What is the safety stock needed to attain a 1 % risk of stockout during lead time?
f. What is the annual holding cost of maintaining the level of safety stock needed to support a 1 % risk?
g. If management specified that a 2% risk of stockout during lead time would be acceptable, would the safety stock holding costs decrease or increase?

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Chapter 12, Problem 48P

Chapter 12, Problem 51P

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Question 4An electronics shop sells 6000 headphones in a year and the sales is relatively constantthroughout the year. These headphones are purchased for SR 20.00 each, and the leadtime is three days. The holding cost per headphone per year is 10% of the unit cost andthe ordering cost per order is SR 75. There are 300 working days per year. Calculate thefollowing:(i) What is the annual holding cost?(ii) In minimizing the cost, how many orders would be made each year?(iii) Given the EOQ, what is the total annual inventory cost (including purchase cost)? Write the answer on the computer

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Chapter 12 Solutions

Operations Management: Sustainability and Supply Chain Management (12th Edition)

Ch. 12 - Question 1. Describe the four types of inventory.Ch. 12 - Question 2. With the advent of low-cost...Ch. 12 - Question 3. What is the purpose of the ABC...Ch. 12 - Question 4. Identify and explain the types of...Ch. 12 - Question 5. Explain the major assumptions of the...Ch. 12 - Question 6. What is the relationship of the...Ch. 12 - Question 7. Explain why it is not necessary to...Ch. 12 - Question 8. What are the advantages of cycle...Ch. 12 - What impact does a decrease in setup time have on...Ch. 12 - When quantity discounts are offered, why is it not...

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Solution Summary: The author explains that inventory management is the process of ordering, storing and using inventory of the company such raw material, components and finished goods.

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Chapter 12 Solutions