Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 4.5, Problem 11P
Summary Introduction
To determine:
Graphical representation of optimal quantity, average order and lead time
Introduction:
Economic order quantity in the optimal inventory kept by any firm which is ideal and do not incur any additional holding cost and order cost.
Lead time is the time between when order is placed and its production is completed.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose 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?
You are running the supply chain for a grocery store operating across Upstate
Souun Carolina. You operate a central warehouse and have multiple stores. For each of the
following situations determine if it would be best to operate inventory for the product that is
pooled at your central warehouse or determined individually by each retail store. Provide at
least 1 sentence discussing your choice.
(a) The demand for boxes of Nutty Bars at each store during a week is i.i.d. with mean
u = 1000 and standard deviation o =
Nutty Bars are high compared to holding costs for Nutty Bars.
10. Transshipment costs between the stores for
(b) The demand for Fudge Rounds at each store during a week is i.i.d. with mean u = 200
75. Transhipment costs between the stores for Fudge
and standard deviation o
Rounds are relatively small compared to holding costs.
Jill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows:
A. Find the total inventory costs if using inventory policy.
This is a case considering safety stock (make sure to use the right formula)
Chapter 4 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 4.4 - Prob. 1PCh. 4.4 - Prob. 2PCh. 4.4 - Prob. 3PCh. 4.4 - Prob. 4PCh. 4.4 - Prob. 5PCh. 4.4 - Prob. 6PCh. 4.4 - Prob. 7PCh. 4.4 - Prob. 8PCh. 4.4 - Prob. 9PCh. 4.5 - Prob. 10P
Ch. 4.5 - Prob. 11PCh. 4.5 - Prob. 12PCh. 4.5 - Prob. 13PCh. 4.5 - Prob. 14PCh. 4.5 - Prob. 15PCh. 4.5 - Prob. 16PCh. 4.6 - Prob. 17PCh. 4.6 - Prob. 18PCh. 4.6 - Prob. 19PCh. 4.6 - Prob. 20PCh. 4.7 - Prob. 21PCh. 4.7 - Prob. 22PCh. 4.7 - Prob. 23PCh. 4.7 - Prob. 24PCh. 4.7 - Prob. 25PCh. 4.8 - Prob. 26PCh. 4.8 - Prob. 27PCh. 4.8 - Prob. 28PCh. 4.9 - Prob. 29PCh. 4.9 - Prob. 30PCh. 4 - Prob. 31APCh. 4 - Prob. 32APCh. 4 - Prob. 33APCh. 4 - Prob. 34APCh. 4 - Prob. 35APCh. 4 - Prob. 36APCh. 4 - Prob. 37APCh. 4 - Prob. 38APCh. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Prob. 45AP
Knowledge Booster
Learn more about
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
- How do you do this? Please list step by step instructions.arrow_forwardA drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .95. The order interval is 14 days, and lead time is 2 days. Average demand for one item is 65 units per day, and the standard deviation of demand is 3 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table. Use Table. Cycle On Hand 40 12 95 Click here for the Excel Data File Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number.) Cycle Units 1 2 3arrow_forwardThe demand for an item is 1,000 units per year. Each order placed costs $10; the annual cost to carry items in inventory is $2 each. In what quantities should the item be ordered?arrow_forward
- A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a servicelevel of .98. The order interval is 14 days, and lead time is 2 days. Average demand for one itemis 40 units per day, and the standard deviation of demand is 3 units per day. Given the on-handinventory at the reorder time for each order cycle shown in the following table, determine theorder quantities for cycles 1, 2, and 3.Cycle On Hand1 422 83 103arrow_forwardFor a specific farm implement ‘FI’ is to be ordered by a food processing company, following data is available: Monthly Demand= 800 units Purchase cost/unit = $40/unit Ordering costs= $60/ order Holding costs (Ch) = $12/unit/year, fire insurance = 6% of the unit cost, 2% other overheads. Determine optimal order quantity of ‘FI’ items and how frequently the order should be placed?arrow_forwardThe head buyer of a Flat Screen TV wants to determine the most optimum inventory practice for the company. She was able to determine the demand and inventory costs needed in her analysis. The annual demand is 10,000 units. The cost is Php1000 per unit per year. The production rate is 50 units per day and there are 250 working days per year. Solve the following and show your solution: a. Daily Demand b. Economic Order Quantity c. Production Cycle d. Production Run per year e. f. Annual Set-up Maximum Inventory g. Minimum Inventory h. Average Inventory i. Annual Holding Inventory Total Inventory Cost 7arrow_forward
- A distribution center (DC) in Wisconsin stocks Sony plasma TV sets. The center receives its inventory from a mega warehouse in Kansas with a lead time (L) of 5 days. The DC uses a reorder point (R) of 300 sets and afixed order quantity (Q) of 250 sets. The current on-hand inventory (OH) at the end of Day 1 is 400 sets, there are no scheduled receipts (SR), and there are no backorders (BO). Assume that all demands and receipts occur at the end of the day. The inventory position is compared to the reorder point after demands and receipts are accounted for. If necessary, an order is placed and the inventory position is updated. Given the demand schedule in the table below, determine when to order using a (Q) systemarrow_forwardThe seasonal demand for a particular product is given below: Period 1 2 3 4 5 6 Demand 300 450 100 450 450 100 The fixed parameters are: Fixed Cost $8 Unit Production Cost $1 Holding Cost $1.3 Calculate total ordering cost using following three methods: i) Lot-for-Lot ii) Wagner-Whitin algorithm iii) Fixed order quantity Please do fast .. ASAP.. fastarrow_forwardBlade Breakers Ltd. manufactures blades. The following are the details of their operation during 2020: Average monthly market demand 2,000 blades Ordering costs $ 200 per order Inventory carrying costs 20% per annum Cost of lamps $ 1000 per blade Normal usage 100 blades per week Minimum usage 50 blades per week Maximum usage 200 blades per week Lead time to supply 4 - 6 weeks Compute: Economic order quantity. Maximum level of stock. Minimum level of stock. Re-order level of stock. What tradeoffs in costs are involved in computing the Economic Order Quantity?arrow_forward
- The campus bookstore sells 4,000 sets of graduation regalia each year. Placing an order from their supplier costs $25 regardless of order quantity, so they usually place a large order (a half year's supply) at a time. It costs $5 per year to hold a cap and gown in inventory, primarily insurance costs for the highly flammable material. What is their optimal order quantity, total cost using the optimal order quantity, and What is the difference in the total cost if they order at their optimal order quantity compared to their current policy?arrow_forwardA drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .99. The order interval is 12 days, and lead time is 4 days. Average demand for one item is 63 units per day, and the standard deviation of demand is 6 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table. Use Table. Cycle On Hand 1 38 2 10 3 93 Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number) Cycle Units 1 1019 Numeric ResponseEdit Unavailable. 1019 incorrect. 2 1047 Numeric ResponseEdit Unavailable. 1047 incorrect. 3 964 Numeric ResponseEdit Unavailable. 964 incorrect.arrow_forwardWhat is ABC Analysis in Inventory Management? How ABC Analysis Relates to the Pareto Principlearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY