OPERATION MANAGEMENT
2nd Edition
ISBN: 9781260242423
Author: CACHON
Publisher: MCG
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Chapter 14, Problem 2PA
Summary Introduction
To identify: The statement that is definitely not true.
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The basic EOQ model is based on all the following assumptions except: *
A. Annual demand is known and constant.B. The item is always available when needed.C.Estimates of ordering and carrying costs are accurate.D.Order is instantaneously received exactly when previous inventory has just been used up.
An item has normally distributed demand with a mean of 100 and a standard deviation of 50. They order a week with one week lead time. Backorders are allowed.
A) With an order-up-to level of 300, on-hand inventory of 200, and on-order inventory of 60, how much will be ordered this week?
B) What is the standard deviation of demand over 2 weeks?
Demand for sandwiches is normally distributed with a mean of 1,280 and a standard deviation of 220. The order quantity is 1,485 units.
What is the expected inventory (in units)?
Chapter 14 Solutions
OPERATION MANAGEMENT
Ch. 14 - Demand in each period follows the same normal...Ch. 14 - Prob. 2CQCh. 14 - For products with slow-moving demandfor example,...Ch. 14 - Prob. 4CQCh. 14 - Prob. 5CQCh. 14 - Prob. 6CQCh. 14 - Prob. 7CQCh. 14 - Prob. 8CQCh. 14 - If the target in-stock probability increases, then...Ch. 14 - Prob. 10CQ
Ch. 14 - Prob. 11CQCh. 14 - Prob. 12CQCh. 14 - Prob. 13CQCh. 14 - Prob. 14CQCh. 14 - Prob. 15CQCh. 14 - Prob. 16CQCh. 14 - Prob. 17CQCh. 14 - Prob. 18CQCh. 14 - Prob. 19CQCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - You are the owner of Hotspices.com, an online...Ch. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PACh. 14 - Prob. 1CCh. 14 - Prob. 2CCh. 14 - Prob. 3CCh. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...Ch. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...
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- Among the following multi-period inventory models, which one has the highest probability of stockout? A. Fixed Order Quantity with Safety Stock B. Fixed Time Period Model C. Fixed Order Quantity D. Both Fixed Order Quantity & Fixed Order Quantity with Safety Stockarrow_forwardSuppose the following item is being managed using a fixed-order quantity model with safety stock. Annual Demand = 100,000 units Order quantity = 30,000 units Safety stock = 4000 units What are the average inventory level and inventory turnover for this item?arrow_forwardThe following data are for an inventory item in which the EOQ model applies: Given: D = 10,000 units (annual demand) R = P10 per unit P = P500 per order C = 25% 0f average inventory Find: a. the number of orders per year b. the economic order quantity (EOQ) c. the amount in pesos per order d. the number of days interval between orders e. the total inventory costsarrow_forward
- A store has collected the following information on one of its products:Demand = 4,500 units/year Standard deviation of weekly demand = 12 units Ordering costs = $40/order Holding costs = $3/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 2 weeks Number of weeks per year = 52 weeks a. If a firm uses the continuous review system to control the inventory, what would be the order quantity and reorder point?arrow_forwardWhich of the following is an assumption of the EOQ model? A. The demand for the material may vary from time to time. B. All of the quantity ordered arrives in full just as the company runs out of inventory C. The item cost and the shortage costs are known and constant. D. The lead time could be different from one order to another.arrow_forwardItem X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,600 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $7 per unit of average inventory. Every time an order is placed for more of item X, it costs $26. a. Whenever item X is ordered, what should the order size be? Note: Round your answer to the nearest whole number. Order size b. What is the annual cost for ordering item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places. Ordering costarrow_forward
- Demand for cars is normally distributed with a mean of 2,700 and a standard deviation of 640. The order quantity is 2,625 units. What is the expected sales (in units)?arrow_forward1- The number of orders in the inventory system (called A) is total demand (called D) divided D by order size per replenishment (called S) or A =". D follows a normal distribution with a mean of 100,000 and standard deviation of 5000. While S is a continuous uniform distribution between 20,000 and 30,000. Generate 500 A random number and find the average.arrow_forwardIn a periodic order system, the lead time for a box of weed killer is 2 weeks. The review period is 1 week. Demand during the protection interval (i.e. review period +lead time) averages 218 boxes, with a standard deviation of 40 boxes. a.) What is the cycle-service level when the target inventory is set at 300 boxes? b.) In the fall season, demand for weed killer decreases but also becomes more variable. Assume demand during the protection interval is expected to decrease to 180 boxes, but with a standard deviation of 50 boxes. What would be the cycle-service level if management keeps the target inventory level set at 300 boxes? C) if the solution is feasible, should the order quantity changearrow_forward
- At sejahtera.com, a large retailer of popular books, demand is constant at 32,000 books per year. The cost of placing an order to replenish stock is $10, and the annual cost of holding is $4 per book. Stock is received five working days after an order has been placed. The backordering is not allowed. Assume 300 working days a year. a. calculate sejahtera.com’s optimal order quantity. b. calculate the optimal number of orders per year c. Calculate the optimal interval (in working days) between orders. d. Determine the demand during the lead time. e. Determine the reorder point. f. Determine the inventory position immediately after an order has been placed. g. Draw the model to represent the case.arrow_forward39 Item X Is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more of item X, it costs $20. a. Whenever item X is ordered, what should the order size be? Note: Round your answer to the nearest whole number. b. What is the annual cost for ordering item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places.arrow_forwardWhich of the following is NOT an assumption of the EOQ model?a. It is possible to receive a purchase discount if the order quantity is sufficiently large.b. There is a fixed cost to submit each order that is independent of the amount ordered.c. Demand occurs at a constant rate per unit of time.d. There is a cost to hold each unit of inventory per unit of timearrow_forward
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