OPERATION MANAGEMENT
2nd Edition
ISBN: 9781260242423
Author: CACHON
Publisher: MCG
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Chapter 14, Problem 3PA
Summary Introduction
To calculate: The coefficient of variation of the orders.
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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?
XYZ Company must order tires from its warehouse. It costs $10400 to place an order and to review the inventory level. Annual tire sales are normally distributed with mean 18000 and variance 4,000,000. It costs $8 per year to hold a tire in inventory, and each order arrives two weeks after being placed. The Company uses periodic review (R, S) policy.
What is the review interval R (in years), estimated using EOQ.?
Select one:
a. 0.3801
b. 0.19
c. 0.2687
d. 1.075
e. 0.1267
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)?
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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- An electronics retailer wants to develop an inventory policy to achieve 99% chance of not getting stockouts for a chip. The daily demand for the chip is estimated to be Normal with mean 200 and standard deviation of 20. They count the chip inventory every 2 weeks to place an order, and it takes 11 days for the ordered chips to be delivered. The retailer operates 7 days a week, 365 days a year. They are going to implement an order-up-to model. A) What base stock level should they choose? B) What is the number of chips they would have on order (on average)? C) When they checked their inventory of chips to place a new order, they found that they ran out of stock completely. In addition, they have 10 chips on way to be delivered, while there are five customers who paid for 20 chips in total and are waiting to receive their chips. How many chips should the retailer order?arrow_forward= A small manufacturing facility stocks a single-use filter, part SUF100, for their production process. It costs the manufacturer $1.50 per filter to purchase and $100 per order placed. They use a holding cost of 28% annually. Monthly demand for SUF100 follows a normal distribution with u 280 and σ = = 77. The parts arrive five months after an order is placed. If a stockout occurs, the demand is backlogged, not lost, and costs the production facility $12.80 per part backordered. 1. Find the optimal order quantity and reorder level to minimize average annual cost of holding, setup, and stockout. 2. What is the average annual cost of holding, setup, and stockouts, when the Q,R-policy in part 1 is used?arrow_forwardA retailer uses the order-up-to model to manage inventory of an item in a store. The leadtime for replenishments is four weeks and it can place orders weekly. Weekly demand isPoisson with mean 0.10 unit. Its order-up-to level is five and unfilled demand is backordered. What is the coefficient of variation of its orders?arrow_forward
- (Round your answer to 2 decimal places.) A retailer uses the order-up-to model to manage inventory of an item in a store. The lead time for replenishments is 4 weeks and it can place orders weekly. Weekly demand is Poisson with mean 0.05 unit. Its order-up-to level is 5 and unfilled demand is backordered. What is the coefficient of variation of its orders?arrow_forward(Please solve all part and do not give solution in image format thanku)arrow_forwardThe manager of a local retail store is ordering a specialty item from a supplier in Toronto. The lead time is cons days. The store is open 300 days a year (50 weeks Monday-Saturday, with a two-week vacation). The average. is 40 units, with a standard deviation of 7.6. (Assume that the distribution is approximately normal.) It costs $40 to place an Time left 1:45:28 order, and the annual holding cost is 30% of the inventory value. The supplier charges $8.00 per unit. Find the economic order quantity (EOQ). O a. 1788 O b. 346 O c. 36 Od. 632 The manager of a local retail store is ordering a specialty item from a supplier in Toronto. The lead time is constant at five days. The store is open 300 days a year (50 weeks Monday-Saturday, with a two-week vacation). The average daily demand is 40 units, with a standard deviation of 7.6. (Assume that the distribution is approximately normal) It costs $40 to place an order, and the annual holding cost is 30% of the inventory value. The supplier…arrow_forward
- Your company currently keeps a safety stock of 554 units of a particular product that has a lead time of 10 days. Records indicate that the weekly demand was as follows: 1176 955 780 1052 736 842 748 993 852 738 794 1444 1333 1372 1106 706 923 734 786 729 1357 1165 1277 683 1106 What is the current service level? Input your result as the decimal form and round to 4 decimal places. You are requested to recommend a safety stock that will ensure an average service level of 97.5%. The lead time is not expected to change. What safety stock would you recommend? (0 decimal places)arrow_forwardTorrance Refinery produces approximately 23.1 Million barrels of gasoline per year. A California distributor sources its gasoline from the Torrance refinery. The annual demand for gasoline at the California distributor is 5.3 Million barrels. The cost of storing gasoline is approximately $29 per barrel (per year). The cost of placing an order to the Torrance refinery (including shipping) is $7300 per order. Orders will be received gradually instead of delivered all at once (hence EPQ). At what quantity will the total cost of procurement be the lowest? Round your answer to the nearest whole number. Do NOT include a comma. For example, answer like 103542 and NOT 103,542 Answer: 58845 Checkarrow_forwardService level is: B and D O the probability of not stocking out. calculated as the cost of a shortage divided by (the cost of shortage + the cost of overage) for single-period models. O the probability of stocking out. something that should be minimized in retail.arrow_forward
- 49 A newspaper boy is trying to perfect his business in order to maximize the money he can save for a new car. Daily paper sales are normally distributed, with a mean of 100 and standard deviation of 10. He sells papers for $0.50 and pays $0.30 for them. Unsold papers are trashed with no salvage value. How many papers should he order each day and what % of the time will he experience a stockout? Are there any drawbacks to the order size proposed and how could the boy address such issues?arrow_forwardPlease do not give solution in image format thankuarrow_forwardGyona purchases meat from the local supermarket at $5 per kilo and sell it at $9 per kilo. any unsold meat is sold to the Chinese restaurant near by at $2 per kilo. Gyona is sure that the demand follows a normal distribution with a mean of 100 kilograms and a standard deviation of 15 kilograms. - How many kilograms should she order each day?arrow_forward
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