Chapter 12, Problem 4QP

Consider a toy retailer with warehouses in St. Louis and Kansas City, Missouri. The warehouses stock an identical popular toy delivered to stores in the two cities. Assume a warehouse serves only stores in its city. Weekly demand for St. Louis is normally distributed with mean 2,000, and standard deviation 400 (that is N(μ = 2,000, σ = 400)). Weekly demand for KansasCity is distributed N(μ = 2,000, σ = 300). We assume that the two cities are far enough apart so that demand in the two cities is independent.The following parameters are seen by both warehouses:Replenishment lead time in weeks ~ N(μ = 2, σ = 0.1);Fixed shipping cost of replenishment: $500;Cost per toy: $10; andHolding cost per toy 20 percent of toy’s value per year.How many toys should each location order at a time and when should they reorder if they want a 99 percent cycle service level? What if they pool the two locations?

Company C sells semiconductors that are used in handheld consumer electronics. The company has been extremely successful recording an increase in earnings each of the past four quarters. At the end of the current quarter, Larry Gomez, the company’s accountant, calculated the ending inventory for the semiconductors and was surprised to find that the quantity of the Z100 model had not changed during the quarter. Larry confirmed his calculation with the inventory control manager, who indicated that sales of the Z100 had stopped when the Z200 semiconductor was released early in the quarter. Larry found out that the Z200 semiconductor has the same applications as the Z100, but has more computing power and a lower cost than the Z100. Larry notified Sheena Snyder , the chief financial officer, about the semiconductors and recommended that the company apply the lower-of-cost-or-market method to the Z100 semiconductors in inventory. Later that day, Sheena called Larry telling him not to apply…

A Mercedes dealer must pay $20,000 for each car purchased. The annual holding cost is estimated to be 25% of the dollar value of inventory. The dealer sells an average of 500 cars per year. He considers the lawsuit to be behind schedule but estimates that if he is short on one car in one year he will lose $20,000 worth of future profits. Each time the dealer places an order for automobiles, the ordering cost adds up to $10,000. Determine the distributor's optimal ordering policy. What is the maximum deficit that will occur? What is the total annual cost?

3.    Cynthia Knott’s oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $12 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $1 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 100 pounds and a standard deviation of 15 pounds.  a)    What is the cost of underestimating demand for each pound? b)    What is the overage cost per pound? c)    How many pounds of oyster should she order each day? d)    What is the stockout risk for this order size?

35) Orders for a stock trading system are coded as follows from left to right: i. The first character is 'B' for a "buy" order, 'S' for a "sell" order ii. The number of shares to buy or sell iii. The stock ticker symbol in all uppercase letters for a "buy" order or alf lowercase letters for a "sell" order iv. If the order is a "limit" order with a specific buy/sell price, the requested price in pennies, otherwise the price should be omitted and the order will be a market order at the current asking price for the stock v. If the order is a "limit" order with an expiration time, the character 'T' followed by the number of minutes until the order expires and should no longer be executed

please solve within 30 minutes.

Purchase Discounts It is typically beneficial for companies to take advantage of early-paymentdiscounts allowed on purchases made on credit. To see why this is the case, determine the effectiverate of interest associated with not taking advantage of the early-payment discount for each of thefollowing situations. Assume in each case that payment is made on the 30th day of the billing cycle.Required1. What is the opportunity cost of not taking advantage of the discount associated with purchases madeunder the following terms: 2/10, n/30? (Show calculations.)2. What is the opportunity cost of not taking advantage of the discount associated with purchases madeunder the following terms: 1/10, n/30? (Show calculations.)3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment forpurchase discounts?

ULINE packaging supplies has a contract to fill 50 gallon barrels with gasoline for use by the U.S. Army. The machine that ULINE uses has an adjustable device that allows the average fill per barrel to be adjusted as desired. However, the actual distribution of fill volume from the machine is known to be normally distributed with a standard deviation equal to 0.5 gallons. The contract that ULINE has with the military calls for no more than 2 percent of all barrels to contain less than 49.2 gallons of gasoline. In order to meet this requirement, ULINE should set the mean fill to approximately 49.92 gallons. 00 True False

A Mercedes dealer pays $40,000 for each car purchased (wholesale price). The annual holding cost is estimated to be 30% of the dollar value of inventory. The dealer sells an average of 1200 cars per year. They believe that demand is backlogged but estimate that if they are short one car for one year, the loss in future profits is about 10% of the wholesale price. Each time the dealer places an order for cars, ordering costs amount to $1600. Assume there are 360 work days per year. Question: What percent of the time do shortages occur?  I've deduced the percent of shortage time to be 25%, but am not sure I've set up my formulas correctly.