Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Question
Chapter 13, Problem 33P
a)
Summary Introduction
To determine: ABC classification for the items.
Introduction: Inventory is a stock or store of goods. Every company store lots of goods as inventory which will be used during replenishment periods. Management of inventory is so much essential to manage cost and also to reduce cost.
b)
Summary Introduction
To determine: Economic order quantity for each item.
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Students have asked these similar questions
I am working on determining optimal order quantity for the Sport Obermeyer case. " Using the data in Exhibit 10, make a recommendation for how many units of each style Wally should make during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong and that Wally's initial production commitment must be at least 10,000 units. Ignore price differences among styles in your initial analysis."
The exhibit provides cost for each style, 6 sales forecasts and an average forecast. Standard deviation and 2x standard deviation are also given.
How do I start?
Develop a EOQ solution and calculate total relevant costs for the gross requirements in the following table*.
Period
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirements
20
30
30
30
20
10
40
60
*Holding cost
=$
2.50/unit/week; setup cost
=$
150; lead time
=1 week; beginning inventory
=40.
What is the average demand per week? with 2 decimal places):
Calculate Economic Order Quantity (EOQ)
Develop a EOQ solution (enter your responses as whole numbers).
Period
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirements
20
30
30
30
20
10
40
60
Scheduled receipt…
Determine an A-B-C classification for these items:
Which items are A, B, and C - explain how you derive the answers? Use a table or excel spreadsheet to illustrate your work.
Item Unit Cost Annual Volume (000)1 300 252 90 303 30 604 50 105 15 706 100 407 10 60
Hint:Determine the Annual Dollar Value (Unit Cost * Annual Volume) for each item and the sum of the individual Annual Dollar Values. Arrange the items in descending order based on Annual Dollar Values. Then, determine the percentage of items and the percentage of…
Chapter 13 Solutions
Operations Management
Ch. 13 - What are the primary reasons for holding...Ch. 13 - What are the requirements for effective inventory...Ch. 13 - Briefly describe each of the costs associated with...Ch. 13 - What potential benefits and risks do RFID tags...Ch. 13 - Prob. 5DRQCh. 13 - Prob. 6DRQCh. 13 - a. List the major assumptions of the EOQ model. b....Ch. 13 - Explain briefly how a higher carrying cost can...Ch. 13 - What is safety stock, and what is its purpose?Ch. 13 - Prob. 10DRQ
Ch. 13 - What is meant by the term service level? Generally...Ch. 13 - Describe briefly the A-B-C approach to inventory...Ch. 13 - The purchasing agent for a company that assembles...Ch. 13 - Explain how a decrease in setup time can lead to a...Ch. 13 - What is the single-period model, and under what...Ch. 13 - Can the optimal stocking level in the...Ch. 13 - Prob. 17DRQCh. 13 - What trade-offs are involved in each of these...Ch. 13 - Who needs to be involved in inventory decisions...Ch. 13 - How has technology aided inventory management? How...Ch. 13 - To be competitive, many fast-food chains began to...Ch. 13 - As a supermarket manager, how would you go about...Ch. 13 - Sam is at the post office to mail a package. After...Ch. 13 - Give two examples of unethical conduct involving...Ch. 13 - Prob. 1PCh. 13 - a. The following table contains figures on the...Ch. 13 - A bakery buys flours in 25-pound bags. The bakery...Ch. 13 - A large law firm uses an average of 40 boxes of...Ch. 13 - Garden Variety Flower Shop uses 750 clay pots a...Ch. 13 - A produce distributor uses 800 packing crates a...Ch. 13 - A manager receives a forecast for next year....Ch. 13 - A food processor uses approximately 27,000 glass...Ch. 13 - The Friendly Sausage Factory (FSF) can produce hot...Ch. 13 - A chemical firm produces sodium bisulfate in...Ch. 13 - A company is about to begin production of a new...Ch. 13 - Prob. 12PCh. 13 - A mail-order house uses 18,000 boxes a year....Ch. 13 - A jewelry firm buys semiprecious stones to make...Ch. 13 - A manufacturer of exercise equipment purchases the...Ch. 13 - A company will begin stocking remote control...Ch. 13 - A manager just received a new price list from a...Ch. 13 - A newspaper publisher uses roughly 800 feet of...Ch. 13 - Given this information: Expected demand during...Ch. 13 - Given this information: Lead-time demand = 600...Ch. 13 - Demand for walnut fudge ice cream at the Sweet...Ch. 13 - The injection molding department of a company uses...Ch. 13 - A company uses 85 circuit boards a day in a...Ch. 13 - One item a computer store sells is supplied by a...Ch. 13 - The manager of a car wash received a revised price...Ch. 13 - A small copy center uses five 500-sheet boxes of...Ch. 13 - Ned's Natural Foods sells unshelled peanuts by the...Ch. 13 - Regional Supermarket is open 360 days per year....Ch. 13 - A service station uses 1,200 cases of oil a year....Ch. 13 - Caring Hospital's dispensary reorders doses of a...Ch. 13 - A drugstore uses fixed-order cycles for many of...Ch. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Demand for jelly doughnuts on Saturdays at Don's...Ch. 13 - A public utility intends to buy a turbine as part...Ch. 13 - Skinner's Fish Market buys fresh Boston bluefish...Ch. 13 - A small grocery store sells fresh produce, which...Ch. 13 - Demand for devil's food whipped-cream layer cake...Ch. 13 - Prob. 39PCh. 13 - Demand for rug-cleaning machines at Clyde's...Ch. 13 - A manager is going to purchase new processing...Ch. 13 - A Las Vegas supermarket bakery must decide how...Ch. 13 - Offwego Airlines has a daily flight from Chicago...Ch. 13 - UPD Manufacturing produces a range of health care...Ch. 13 - Prob. 1.2CQCh. 13 - Prob. 2.1CQCh. 13 - Grill Rite is an old-line company that started out...Ch. 13 - SARAH LUBBERS AND CHRIS RUSCHE, GRAND VALLEY STATE...Ch. 13 - SARAH LUBBERS AND CHRIS RUSCHE, GRAND VALLEY STATE...Ch. 13 - Prob. 4.3CQCh. 13 - SARAH LUBBERS AND CHRIS RUSCHE, GRAND VALLEY STATE...Ch. 13 - Prob. 4.5CQCh. 13 - Prob. 1OTQCh. 13 - Prob. 2OTQCh. 13 - Prob. 3OTQCh. 13 - Prob. 4OTQ
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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
- Arrange a plan to order from the supplier using Part Period Balancing and Least Unit Cost method based on the data. Ordering lead time of the components is 1 period. Calculate the total cost of each method.arrow_forwardPlease give answer to question (b) of the following tablearrow_forwardA company produces skateboards. Each skateboard (A) consists of one unit of board (B), and two units of sub-assembly of roller-set (C). Roller-sets comprise of 2 components: 2 rollers (D) and one axle (E). The MPS is as follows: Week 1 2 3 4 5 6 7 8 9 10 A D 40 50 60 80 What are the planned order releases for item A? A has an on-hand inventory of 10, safety stock of 0. The lead time is 1 week and the ordering policy is Lot-for-Lot (L4L).arrow_forward
- Develop an EOQ solution and calculate total relevantcosts for the data in the preceding table.arrow_forwardA firm orders a number of items from a regional warehouse every 2 weeks. Deliverytakes 1 week. Average demand is 200 units per week, and safety stock is held at2 weeks’ supply.a. Calculate the target level.b. If 600 units are on hand, how many should be ordered?arrow_forwardQuestion 12 Simulate the following inventory replenishment problem for 20 weeks. You will have to use the Excel program to simulate. Demand is uniformly distributed between 20 and 30 units. Additional Data are given below. Inventory Cost/Week = $ 1.00 Shortage Cost/Week = $ 2.00 Lead Time = 2 weeks %3D Beginning Stock on Hand (SOH) = 0 %3D Supply in Week 1 = 21 units %3! Supply in Week 2= 22 units What is the total shortage cost at the end of 20 weeks if the order size in every week is 20 units? tion The demand for the next 20 weeks is given below ation Week 1 2 Demand 21 22 4 10 30 21 27 28 23 29 21 25 Week 11 12 13 14 15 17 16 18 19 20 COarrow_forward
- a. Determine an A-B-C classification for these items:Item Unit Cost Annual Volume (00)1 $100 252 80 303 15 604 50 105 11 706 60 857 10 60b. Find the EOQ given this information: D = 4,500 units/year, S = $36, and H = $10 per unit per year.c. Find the economic production quantity given this information.D = 18,000 units/year, S = $100, H = $40 per unit per year, p = 120 units per day,and u = 90 units/dayarrow_forwardGiven the following list of items,a. Classify the items as A, B, or C.b. Determine the economic order quantity for each item (round to the nearest whole unit).ItemEstimatedAnnualDemandOrderingCostHoldingCost(%)UnitPriceH4-010 20,000 50 20 2.50H5-201 60,200 60 20 4.00P6-400 9,800 80 30 28.50P6-401 14,500 50 30 12.00P7-100 6,250 50 30 9.00P9-103 7,500 50 40 22.00TS-300 21,000 40 25 45.00TS-400 45,000 40 25 40.00TS-041 800 40 25 20.00V1-001 33,100 25 35 4.00arrow_forwardEmery Pharmaceutical uses an unstable chemicalcompound that must be kept in an environment where both temperatureand humidity can be controlled. Emery uses 800 poundsper month of the chemical, estimates the holding cost to be 50%of the purchase price (because of spoilage), and estimates ordercosts to be $50 per order. The cost schedules of two suppliers areas follows: a) What is the economic order quantity for each supplier?b) What quantity should be ordered, and which supplier should be used?c) What is the total cost for the most economic order size?d) What factor(s) should be considered besides total cost?arrow_forward
- Given the forecast and booked orders shown in the table, and a beginning inventory of 25, what should the master production schedule quantity be for period 4? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardHolding safety stock inventory in one central location rather than in multiple locations is called: Select one: a. cross-docking b. risk pooling. c. vendor-managed inventory d. outsourcing. e. postponement.arrow_forwardSantos Company buys 500 boxes of items A-1 every two months. Order costs are P380per order. Carrying cost are P1 per unit , and vary directly with inventory investment.Currently the company purchases the item for P5 each. a. What is the order –size decision the company should make, if the supplier give a 5%discount for order sizez of P3,000 units?arrow_forward
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