Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 5, Problem 37AP
Summary Introduction
Interpretation:Number of spare blades to be purchased is to be calculated.
Concept Introduction:
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A plastic canister manufacturing company maintains an annual safety stock of 500 units of plastic caps. If the company places an annual purchase order for 1,800 units of these caps, its average annual inventory, in units, is between:
( )1,500 and 1,300
( )3,200 and 3,000
( )2,400 and 2,200
( )1,200 and 1,000
( )1,900 and 1,700
Joint Products Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin,from a joint process. The joint costs incurred are $420,000 for a standard production run that generates 180,000 pints of Smooth Skin and 120,000 pints of Silken Skin. Smooth Skin sells for $2.40 perpint, while Silken Skin sells for $3.90 per pint.Required1. Assuming that both products are sold at the split-off point, how much of the joint cost of each production run is allocated to Smooth Skin using the relative sales value method?2. If no separable costs are incurred after the split-off point, how much of the joint cost of each productionrun is allocated to Silken Skin using the physical measure method method?3. If separable processing costs beyond the split-off point are $1.40 per pint for Smooth Skin and $0.90 perpint for Silken Skin, how much of the joint cost of each production run is allocated to Silken Skin usinga net realizable value method?4. If separable processing costs beyond the…
30) XYZ Company
The XYZ Company uses 175 handles per day. The company operates 300 days per year. It costs $2.00 to carry one handle in inventory for one year. When handle inventory is low, an order is sent to the fabrication department to manufacture more handles. Fabrication can produce handles at a rate of 1500 per day and send the handles over to assembly while production is in progress. The setup for each production run costs $500.
Assume the XYZ company orders 9,000 handles at a time (not necessarily the economic order quantity). The order receipt period = _____ days.
Group of answer choices
a) 6.0
b) 5.8
c) 30.0
d) 51.4
e) 50.0
Chapter 5 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 5.2 - Prob. 1PCh. 5.2 - Prob. 2PCh. 5.2 - Prob. 4PCh. 5.3 - Prob. 7PCh. 5.3 - Prob. 9PCh. 5.3 - Prob. 12PCh. 5.5 - Prob. 16PCh. 5.5 - Prob. 18PCh. 5.6 - Prob. 21PCh. 5.7 - Prob. 24P
Ch. 5.7 - Prob. 25PCh. 5.7 - Prob. 26PCh. 5.7 - Prob. 27PCh. 5 - Prob. 28APCh. 5 - Prob. 31APCh. 5 - Prob. 32APCh. 5 - Prob. 33APCh. 5 - Prob. 37APCh. 5 - Prob. 38APCh. 5 - Prob. 40APCh. 5 - Prob. 41APCh. 5 - Prob. 43APCh. 5 - Prob. 44APCh. 5 - Prob. 45APCh. 5 - Prob. 46APCh. 5 - Prob. 47APCh. 5 - Prob. 48APCh. 5 - Prob. 49APCh. 5 - Prob. 50APCh. 5 - Prob. 51AP
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- Cryolab Inc makes and sells a lawn fertilizer called Hypergro. The company has developed standard costs for one bag of Hypergro as follows: Standard Quantity/Hours Standard Price/Rate Standard Cost per Bag Direct Material 25 pounds ₱ 0.75 ₱18.75 Direct Labor 0.25 hours ₱69.00 ₱17.30 Variable overhead 0.25 hours ₱24.00 ₱ 6.00 Total ₱42.05 The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct labor hours. During January, the following activity was recorded by the company: Production of Fastgro: 23,000 bags Direct materials purchased: 585,000 pounds at a cost of ₱436,250 Direct labor worked: 5,800 hours at a cost of ₱397,300 Variable overhead incurred: ₱140,650 Inventory of direct materials on January 31: 8,000 pounds Compute the variances and indicate whether it is FAVORABLE (F) or UNFAVORABLE (U) in your solution sheet. The raw…arrow_forward27) Ali has a restaurant where the customers use a different number of disposable cups each day he is open. Every 30 days, Ali places an order to replenish his cup inventory. It takes 3 days for the order to arrive, at which point it brings the inventory level up to 4000 cups. It costs Ali $30 to have the order processed. Select all statements that apply to Ali's situation: Group of answer choices a) Ali uses a Continuous Inventory System b) d is constant c) Ali uses a Periodic Inventory System d) Ali uses a Fixed-Order-Quantity Inventory System e) Maximum Inventory Level is constantarrow_forward1 Annual Demand (D) = 168,000 cases Daily Demand (d) = 380 cases COGS (C) = {c} cases Sd (Standard Deviation of Daily Demand) = 11 cases Stotal =550 cases Logistics Service Level = 93.32 % Lead Time =5 days What is the Safety Stock level at Logistics Service Level of the Golden Best ? What is the full ROP of the Golden Best at the Logistics Service Level ?arrow_forward
- Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUS classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are: Demand (D) = 15,080 units/year Ordering cost (S) = $125.00/order Holding cost (H) = $3.00/unit/year Lead time (L) = 5 weeks Cycle service level = 95 percent Demand is normally distributed, with a standard deviation of weekly demand of 64 units. -Calculate the item's EOQ. - Use the EOQ to define the parameters of an appropriate continuous review and periodie review system for this item. -Which system requires more safety stock and by how much? -How do you think each system can affect your procurement procedures/methods?arrow_forwardYour firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUS classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are: Demand (D) = 15,080 units/year Ordering cost (S) = $125.00/order Holding cost (H) = $3.00/unit/year Lead time (L) = 5 weeks Cycle service level = 95 percent Demand is normally distributed, with a standard deviation of weekly demand of 64 units. 1- How do you think each system can affect your procurement procedures/methods?arrow_forwardWhich of the following is a valid approach to introduce safety stock for dependent demand items? None of the other answer choices are correct. Safety stock is never introduced for dependent demand items A, B, and C are all valid approaches A. Increase the replenishment order by a quantity specified by some estimate of expected plan error B. Add Safety Time into the requirements plan C. Utilize statistical techniques to set safety stocks directly for a dependent demand itemarrow_forward
- The company you work for has collected the following data from the inventory of products that make up the specialized spare parts division. SKU Annual Demand Cost per unit D77 19,300 $2.80 R25 7,800 $0.45 T80 27,600 $0.05 L90 425,000 $1.55 W19 20,000 $0.75 Z55 675 $105.00 X33 2,500 $5.00 Perform an ABC analysis of the data. Based on the results obtained, which element is classified as class A? Explain the factors that could have contributed to your high priority ranking. Analyzes the implications of the ABC classification system for supply chain management. Explains how it can help optimize: a) inventory levels, b) purchasing strategies and c) resource allocation.arrow_forwardThe Westerville Auto Parts Company produces rocker-arm assemblies for use in the steering and suspen-sion systems of four-wheel-drive trucks. A typical container of parts spends 0.02 day in processing and0.08 day in materials handling and waiting during its manufacturing cycle. The daily demand for the part is2,000 units. Management believes that demand for the rocker-arm assembly is uncertain enough to war-rant a safety stock equivalent of 10 percent of its authorized inventory.a. If each container contains 22 parts, how many containers should be authorized?b. Suppose that a proposal to revise the plant layout would cut materials handling and waiting time percontainer to 0.06 day. How many containers would be needed?arrow_forwardCarol Cagle bas a repetitive manufacturing plantproducing trailer bitches in Arlington, Texas. The plant has anaverage inventory tu rnover of only 12 times per year. She hastherefore determined that she will reduce her component lotsizes. She has developed the following data for one component,the safety chain clip:Annual demand = 31,200 unitsDaily demand = 120 unitsDaily production (in 8 hours) = 960 unitsDesired lot size (I hour of production) = 120 unitsHolding cost per unit per year = $12Setup labor cost per hour = $20How many minutes of setup time should she have her plant manageraim for regarding this component?arrow_forward
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