OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
7th Edition
ISBN: 9780077835439
Author: Roger G Schroeder, M. Johnny Rungtusanatham, Susan Meyer Goldstein
Publisher: McGraw-Hill Education
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Chapter 14, Problem 13P

eXcel 13. The Cover-up Drapery Company carries four types of fabric with the following characteristics:

Type Annual Demand (yards) Item Cost per Yard
1 300 $20
2 250 $18
3 100 $12
4 200 $8

Assume that the items are to be ordered together from the same supplier at an ordering cost of $20 per order and an annual carrying cost of 20 percent. Also assume 300 working days in a year.

  1. a. If a P system is used, what is the optimal ordering interval in days?
  2. b. How much of each type of carpet would be ordered when a combined order is placed?
  3. c. What is the effect on the ordering interval of changing the carrying cost to 25, 30, and 35 percent?
  4. d. Why can’t these carpets be ordered by using a Q system?
  5. e. Classify the four items above as A, B, or C inventory items.
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OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)

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