Operations and Supply Chain Management 9th edition
9th Edition
ISBN: 9781119320975
Author: Roberta S. Russell, Bernard W. Taylor III
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 13, Problem 19P
JAL Trading is a Hong Kong manufacturer of electronic components. During the course of a year it requires container cargo space on ships leaving Hong Kong bound for the United States, Mexico, South America, and Canada. The company needs 280,000 cubic feet of cargo space annually. The cost of reserving cargo space is $7000 and the cost of holding cargo space is $0.80/ft3. Determine how much storage space the company should optimally order, the total cost, and how many times per year it should place an order to reserve space.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Earthbound Corporation is a manufacturer and distributor of air conditioning systems. You have been engaged to install an accounting system for Earthbound period among the inventory control features earthbound desires as part of the system are indicators of how much to order and when period.
The following information is furnished for a product called “Hydronix” which is carried in inventory:
Hydronix are sold by the gross (12 dozen) at a list price of P800 per gross FOB shipper. John receives a 40% trade discount off list price on purchases in gross lots.
Freight cost is P20 gross from the shipping point to John's plant
John uses about 5,000 Hydronix during 259-day production year and must purchase a total of 36 gross per year to allow for normal breakage. Minimum and maximum usages are 12 and 28, respectively.
It takes 20 working days (normal delivery time) to receive an order from the date the purchase request is initiated. A rush order in full gross lots can be received by air…
University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from one of the pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of 2,000 capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be 800 capsules. It takes five days for the order to arrive. University Drug would like to satisfy 99 percent of the prescriptions. The salesperson just arrived, and there are currently 25,000 capsules in stock. How many capsules should be ordered?
University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from one of the pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of 2,000 capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be 800 capsules. It takes f ive days for the order to arrive. University Drug would like to satisfy 99 percent of the prescriptions. The salesperson just arrived, and there are currently 25,000 capsules in stock.How many capsules should be ordered?
Chapter 13 Solutions
Operations and Supply Chain Management 9th edition
Ch. 13.S - Prob. 1QCh. 13.S - How are steady-state results achieved in a...Ch. 13.S - Prob. 3QCh. 13 - Describe the difference between independent and...Ch. 13 - Distinguish between a fixed-order-quantity system...Ch. 13 - Discuss customer service level for an inventory...Ch. 13 - Explain the ABC inventory classification system...Ch. 13 - Identify the two basic decisions addressed by...Ch. 13 - Describe the major cost categories used in...Ch. 13 - Explain how the order quantity is determined using...
Ch. 13 - What are the assumptions of the basic EOQ model,...Ch. 13 - How are the reorder point and lead lime related in...Ch. 13 - Describe how the production quantity model differs...Ch. 13 - How must the application of the basic EOQ model be...Ch. 13 - Why do the basic EOQ model variations not include...Ch. 13 - In the production quantity EOQ model, what would...Ch. 13 - Explain in general terms how a safety stock level...Ch. 13 - Explain the difference between a single-stage...Ch. 13 - AV City stocks and sells a particular brand of...Ch. 13 - AV City (Problem 13.1) assumed with certainty that...Ch. 13 - A firm is faced with the attractive situation in...Ch. 13 - The Sofaworld Company purchases upholstery...Ch. 13 - The Wallace Stationery Company purchases paper...Ch. 13 - The Ambrosia Bakery makes calms for freezing and...Ch. 13 - The EastCoasters Bicycle Shop operates 364 days a...Ch. 13 - The Chemeo Company uses a highly toxic chemical in...Ch. 13 - The Food Place Supermarket stocks Munehkin...Ch. 13 - Kroft Foods makes cheese to supply to stores in...Ch. 13 - The Shotz Brewery produces an ale that it stores...Ch. 13 - Tradewinds Imports is an importer of ceramics from...Ch. 13 - JAL Trading is a Hong Kong manufacturer of...Ch. 13 - In Problem 12.1 in Chapter 12, the Hartley-Davis...Ch. 13 - In Problem 12-2 in Chapter 12, Carpel City orders...Ch. 13 - In Problem 12.47 in Chapter 12, Delaplane...Ch. 13 - The Paramount Paper company produces paper from...Ch. 13 - Kellys Tavern serves Shamrock draft beer to its...Ch. 13 - The daily demand for Ironcoat paint at the Top...Ch. 13 - IM Systems assembles microcomputers from genetic...Ch. 13 - IM Systems assembles microcomputers from generic...Ch. 13 - KVS Pharmacy fills prescriptions fen a popular...Ch. 13 - Food Place Market stocks frozen pizzas in a...Ch. 13 - The Mediterranean Restaurant stocks a red Chilean...Ch. 13 - The Aztec Company stock a variety of parts and...Ch. 13 - The EastCoasters Bicycle Shop stocks bikes;...Ch. 13 - Tara McCoy is the office administrator for the...Ch. 13 - The concession stand at the Shelby High School...Ch. 13 - The Instant Paper Clip Office Supply Company...Ch. 13 - The Texas Gladiators Apparel Store The Texas...Ch. 13 - Pharr Foods Company Pharr Foods Company produces a...
Additional Business Textbook Solutions
Find more solutions based on key concepts
••• 4.13 As you can see in the following table, demand for heart transplant surgery at Washington General Hospi...
Operations Management: Sustainability and Supply Chain Management (12th Edition)
What is precedent, and how does it affect common law?
Business in Action
8. What three methods are used to determine the accuracy of any given forecasting method? How would you determi...
Operations Management
What are the three major business functions, and how are they related to one another? Give specific examples.
Operations Management, Binder Ready Version: An Integrated Approach
The best fits using exponential smoothing, trend analysis, and linear regression for the given data. Introducti...
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Consider the sales data for Computer Success given in Problem 7. Use a 3-month weighted moving average to forec...
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardThe materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?arrow_forwardPaulin’s muffler shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information table to determine the optimal inventory target level (or order-up to level). Annual demand 3,910 mufflers ordering cost $75 per order S/D of daily demand 6 mufflers/wk. day service probability 87% Item cost $ 27.00 per muffler lead time 2 wk. Days Annual holding cost 36 % of item value wk. Days 230 per year Review period 18 working days What is the optimal target levels (order up to levels) use excels NORMSINVI() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round value 2 decimal places and final answer to the nearest whole number If the service probability is 90%, the optimal target level will increase, decrease or…arrow_forward
- The Petroco Company uses a highly toxic chemical in one of its manufacturing processes. It must have the product delivered by special cargo trucks designed for safe shipment of chemicals. As such, ordering (and delivery) costs are relatively high, at $2,600 per order. The chemical product is packaged in 1-gallon plastic containers. The cost of holding the chemical in storage is $50 per gallon per year. The annual demand for the chemical, which is constant over time, is 2,000 gallons per year. The lead time from time of order placement until receipt is 10 days. The company operates 310 working days per year. Compute the optimal order quantity, the total minimum inventory cost, and the reorder point.arrow_forwardScotch Pub bar sells Speylachie high-end whiskey among other beverages. The demand for Speylachie is normally distributed. The inventory related information at Scotch Pub is as follows: Average Annual Demand = 2,500 liters Standard deviation of weekly demand = 22 liters One-liter bottle cost = bought at £112.50 per bottle from a brewery in Scotland Ordering cost = £144.00 per order Lead time = 3 weeks Annual inventory-holding cost estimate = 4% of the bottle cost Required service level = 95% Scotch Pub works 50 weeks a year. Note: The approximate z values are: for 0.9 ≈ 1.28, for 0.92 ≈ 1.405, for 0.95 ≈ 1.645, for 0.98 ≈ 2.05. Suppose the bar management practices the fixed-PERIOD ordering system with the review period equal to the “economic time interval”. Answer the following questions: (i) When do they place an order? (ii) If at the time of review there are 333 bottles are available in the stock, how many bottles of Speylachie they will order? (iii) What is the…arrow_forwardH & K Electronic Warehouse sells a 12-pack of AAA batteries, and this is a very popular item. Demand for this is normally distributed, with an average of 50 packs per day and a standard deviation of 16. The average delivery time is 5 days, with a standard deviation of 2 days. Delivery time has been found to be normally distributed. A 96% service level is desired. What is the standard deviation of demand during the lead time? How much safety stock should be carried, and what should be the reorder pointarrow_forward
- Fisk Corporation is trying to improve its inventory control system and has installed an online system at its retail stores. Fisk anticipates sales of 58,800 units per year, an ordering cost of $4 per order, and carrying costs of $1.50 per unit. In the second year, Fisk Corporation finds that it can reduce ordering costs to $1 per order, but carrying costs will stay the same at $1.50 per unit. a-1. What is the economic ordering quantity for the second year? Economic ordering quantity (EOQ) a-2. How many orders will be placed during the second year? Number of orders a-3. What will the average inventory be for the second year? Average inventory Total costs units units a-4. What is the total cost of ordering and carrying inventory for second year? LAarrow_forwardMichaela Bag, engaged in reselling school bags is having problems when it comes to managing its inventory quantities. Most of the time, Michaela Bag would run out of bags because she would order too few quantities. Their annual requirement, as forecasted by its proprietress, is 24,000 bags. The costs associated with carrying every unit of school bag would be ₱7. It is estimated that each order from her supplier will cost ₱300. Compute for Michaela Bag economic order quantity.arrow_forwardSam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…arrow_forward
- Catlea Merchandising is engaged in selling school shoesfor both boys and girls in their teenage years. Catlea needs 32,000 pairs of shoes in a year in order to satisfy the market demand. It costs ₱ 48 to place an order while ₱ 8 is needed to hold each quantity of shoe in Catlea's inventory. Upon checking on Catlea's supplier, it takes 8 days in between placing an order and eventually receiving it. a. Determine the Economic Order Quantityb. Determine the number of order per monthc. Determine the reorder pointarrow_forwardAlina Limited is a manufacturer of widgets orders components for use in manufacturing. The estimated demand for the components during the coming year is 15,000. Order costs are $100 per order; carrying costs are $12 per component. Using the economic order quantity model What is Alina Ltd’s optimum order quantity? If the supplier guarantees a three (3) day delivery on any order that is placed, What is the re-order point?arrow_forwardSam's Pet Hotel operates 5050 weeks per year, 66 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.0013.00 per bag. The following information is available about these bags: follows≻Demandequals=8080 bags/week follows≻Order costequals=$55.0055.00/order follows≻Annual holding costequals=2020 percent of cost follows≻Desired cycle-service levelequals=8080 percent follows≻Lead timeequals=55 weeks (3030 working days) follows≻Standard deviation of weekly demandequals=1515 bags follows≻Current on-hand inventory is 320320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 8080 bags is incorrect and actual demand averages only 5555 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY