Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (11th Edition)
11th Edition
ISBN: 9780134111056
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 11P
Acadia Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final—mile services. Acadia could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand, and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $12.00 pa” square foot. The yearly cost of leasing public ware house space is $20.00 per square foot. The expected demand requirements follow:
- Calculate the expected value of leasing public warehouse space as required by demand.
- Calculate the expected value of building a 200,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 200,000 square feet of space.
- Calculate the expected value of building a 300,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 300,000 square feet of space.
- Calculate the expected value of building a 400,000-square-foot distribution center and leasing public warehouse space as required if demand exceeds the need for 400,000 square feet of space.
- Calculate the expected value of building a 500,000-square-foot distribution.
- Which of these decisions provides the minimized expected value?
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Acadia Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final-mile
services. Acadia could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand,
and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $15.00
per square foot. The yearly cost of leasing public warehouse space is $24.50 per square foot.
E Click the icon to view the expected demand requirements.
a. The expected value of leasing public warehouse space as required by demand is S
(Enter your response as a whole number.)
More Info
Requirements (in sq. ft)
Probability
230,000
430,000
630,000
830,000
0.35
0.4
0.2
0.05
Print
Done
Donegal Footwear is an international supplier of outdoor footwear for adventurous families. Currently, the company uses a logistical provider to provide warehouse services and handle packages destined for ground delivery. The contract calls for $9 million in annual fixed charges, which covers the provider’s overhead and warehouse costs, and variable costsof $15 per package shipped. Recently, Donegal Footwear found a warehouse it could lease at a cost of $16 million per year, which includes lease costs, labor, and management oversight. Furthermore, the company found another provider who would deliver packages from the warehouse for $6.00 per package. Considering only costs, how many packages must Donegal Footwear ship to make the vertical integration into warehouse operations beneficial?
Jordan Airline routinely overbooks its flights from Dallas to Florida. Overbooking discounted seats can be expensive because providing a bumped passenger with a last-minute flight on a competing carrier can cost $2,200. A 150-passenger jet costs about $150,000 to operate from Raleigh to Atlanta. The average ticket price is $2,000.
Table. The frequency of no-shows
NO-SHOWS
FREQUENCY
1
15
2
10
3
10
4
5
5
5
6
5
a. how many seats should be overbooked? (show your calculations)
b. Korean Airline increased the average ticket price from $2,000 to $3,000 on its Atlanta/Seoul route for the holidays. How would the increased ticket price affect the number of seats overbooked? (show your calculations)
Chapter 14 Solutions
Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (11th Edition)
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