Operations Management: Processes And Supply Chains (12th Edition) (what's New In Operations Management)
12th Edition
ISBN: 9780134742205
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter 9, Problem 4AME
Summary Introduction
Interpretation: The increase in total cost if ordered twice and also if ordered half by the store manager as many bird feeders as EOQ should be calculated.
Concept Introduction: Ordering Optimum size (creating no additional or shortage of materials in stock) at minimum ordering cost is EOQ and aggregating of annual holding & ordering cost gets total cost
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Suppose Total cost is "A" and EOQ is "B"
How much does the total cost increase if the store manager orders twice as many bird feeders as the EOQ? How much the total cost increase if the store manager orders half as many bird feeders as the EOQ?
What will be the steps.
The average expense of keeping inventory for an integrated circuit producer is 48 percent.What inventory keeping expense (in $) does an object cost $300 and has an estimated one-month inventory supply?
Wang Distributors has an annual demand for an airport metal detector of 1,421 units. The regular cost of a detector for Wang is $363. The storage cost is estimated to be 20% of the unit cost, and the cost of placing each order is $25. If Mr. Wang, the owner, orders quantities of 300 or more, the cost of one detector will be $365. Wang Distributors has a year of 250 business days. When a new order of detectors is made, the supplier takes 3 days to deliver it. Show your work. 1. What inventory management model should we use to solve this problem? Model Economic Quantity to Produce Model Economic Quantity to Order Model to handle dependent demand Model for discount purchases 2. What is the optimal quantity of detectors that should be made in each order if purchased at full price? Response 3. What is the optimal quantity of detectors that should be made in each order if purchased at a discount price? Response 4. After validating the quantity of detectors that should be made in each order…
Chapter 9 Solutions
Operations Management: Processes And Supply Chains (12th Edition) (what's New In Operations Management)
Ch. 9 - What is the relationship between inventory and the...Ch. 9 - Suppose that a large discount retailer with a lot...Ch. 9 - Will organizations ever get to the point where...Ch. 9 - A part is produced in lots of 1,000 units. It is...Ch. 9 - Prince Electronics, a manufacturer of consumer...Ch. 9 - Terminator, Inc. manufactures a motorcycle part in...Ch. 9 - Ruby-Star Incorporated is considering two...Ch. 9 - Haley Photocopying purchases paper from an...Ch. 9 - Prob. 6PCh. 9 - Southern Markets, Inc. is considering the use of...
Ch. 9 - New Wave Shelving’s inventory manager would like...Ch. 9 - Yellow Press, Inc. buys paper in 1,500-pound rolls...Ch. 9 - Babble, Inc. buys 400 blank cassette tapes per...Ch. 9 - At Dot Com, a large retailer of popular books,...Ch. 9 - Leaky Pipe, a local retailer of plumbing supplies,...Ch. 9 - Sam’s Cat Hotel operates 52 weeks per year, 6...Ch. 9 - Consider again the kitty litter ordering policy...Ch. 9 - In a Q system, the demand rate for strawberry ice...Ch. 9 - Petromax Enterprises uses a continuous review...Ch. 9 - In a continuous review inventory system, the lead...Ch. 9 - In a two-bin inventory system, the demand for...Ch. 9 - You are in charge of inventory control of a highly...Ch. 9 - Your firm uses a continuous review system and...Ch. 9 - A company begins a review of ordering policies for...Ch. 9 - Prob. 22PCh. 9 - The Farmer’s Wife is a country store...Ch. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - In a P system, the lead time for a box of...Ch. 9 - Suppose that Sam’s Cat Hotel in Problem 13 uses...Ch. 9 - Your firm uses a periodic review system for all...Ch. 9 - Using the same information as in Problem 21,...Ch. 9 - Wood County Hospital consumes 1,000 boxes of...Ch. 9 - A golf specialty wholesaler operates 50 weeks per...Ch. 9 - What is the EOQ and what is the lowest total cost?Ch. 9 - What is the annual cost of holding inventory at...Ch. 9 - Prob. 3AMECh. 9 - Prob. 4AMECh. 9 - Prob. 5AMECh. 9 - Prob. 6AMECh. 9 - Comment on the sensitivity of the EOQ model to...Ch. 9 - Consider the pressures for small versus large...Ch. 9 - Prob. 2VCCh. 9 - The Marker Maker© product recently experienced an...Ch. 9 - Put yourself in Sue McCaskey’s position and...Ch. 9 - By how much do your recommendations for these two...
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- A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier charges $84 per stone, annual carrying costs are 7%, and the cost of processing orders is $26. The jewelry firm operates 250 days per year and their usage rate is 42 stones per day.How many orders per year will be placed for semi-precious stones?arrow_forwardPart Number Part Unit Value in $ Quantity currently in inventory Average annual usage 1234 2.5 3000 1235 0.2 900 1236 15 1000 1237 0.75 7900 1238 7.6 2800 1239 4.4 5000 1240 1.8 1800 1241 0.05 1200 1242 17.2 2000 1243 2500 1244 7000 300 550 400 50 180 20 200 10 950 160 430 9 3.2 given following table, perform ABC classificationarrow_forwardRomulo Drugstore sells 10 bottles of Paracetamol syrup Strawberry flavor 60 mL a day, and 15 bottles on holidays and weekends. It takes 5 days for the supplier to deliver the order; and on peak seasons and certain occasions, the supplier takes 10 days to deliver the ordered items. What should be the safety stock level of the said item? 20 bottles 25 bottles 100 bottles 175 bottlesarrow_forward
- Xemex has collected the following inventory data for the six items that it stocks: ITEM CODE UNIT COST ($) ANNUAL DEMAND (UNITS) ORDERING COST ($) CARRYING COST AS A PERCENTAGE OF UNIT COST 1 10.60 600 40 20 2 11.00 450 30 25 3 2.25 500 50 15 4 150.00 560 40 15 5 4.00 540 35 16 6 4.10 490 40 17 Lynn Robinson, Xemex’s inventory manager, does not feel that all of the items can be controlled. What ordered quantities do you recommend for which inventory product(s)?arrow_forwardIf annual sales in are 65,000 units, price per unit is $25, carrying costs are 30%, and fixed costs per order is $100, then EOQ is 1,316.56. True or False?arrow_forwardWood County Hospital consumes 1,500 boxes of bandages per week. The price of bandages is $36 per box, and the hospital operates 52 weeks per year. The cost of processing an order is $15, and the cost of holding one box for a year is 20 percent of the value of the material. a. The hospital orders bandages in lot sizes of 900 boxes. What extra cost does the hospital incur, which it could save by using the EOQ method? $ 435.37 (Enter your response rounded to two decimal places.) b. Demand is normally distributed, with a standard deviation of weekly demand of 150 boxes. The lead time is 2 weeks. Refer to the standard normal table for z-values. What safety stock is necessary if the hospital uses a continuous review system and a 95 percent cycle-service level is desired? 348 boxes. (Enter your response rounded to the nearest whole number.) What should be the reorder point? boxes. (Enter your response rounded to the nearest whole number.) pm ointsarrow_forward
- a) c) If the production rate of processing the product is 30000 per year and the set up cost per set up is $300 and the product is allowed to sell during production. The maintenance department of a large hospital uses about 11000 cases of liquid cleanser annually. Ordering cost is $35, carrying cost per unit is 20 percent of the prices of a case, and the new price schedule indicates that orders of less than 200 cases will cost $80 per case, 200 to 299 cases will cost $78 per case, 300 to 399 cases will cost $76 per case, and orders larger than 399 will cost $75 per case.i. Determine the optimal order quantity for each of the rangesii. Determine the optimal total cost per year for each of the ranges.iii. Determine the minimal total cost solution to the problem.arrow_forwardA company is targeting a cycle service level of 25%. What should their reorder point be if they have an average weekly demand of 100, a weekly demand standard deviation of 20, and a lead time of 5 weeks?arrow_forwardDunstreet’s Department Store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on hand. How many sheets should you order?arrow_forward
- Cherylene Brown has asked you to help her determine the best ordering policy for a new product. The demand for the new product has been forecasted to be about 1,000 units annually. To help you get a handle on the carrying and ordering costs, Cherylene has given you the list of last year's costs. She thought that these costs might be appropriate for the new product. Cost Factor Taxes for the warehouse Receiving and incoming inspection New product development Acct. dept. costs to pay invoices Inventory insurance Product advertising Spoilage Sending purchasing orders Cost ($) 2,050 1,600 2,500 500 600 800 750 900 Cost Factor Warehouse supplies Research and development Purchasing salaries & wages Warehouse salaries & wages Pilferage of inventory Purchase order supplies Inventory obsolescence Purchasing dept. overhead Cost ($) 300 2,750 30,000 12,800 800 500 300 1,000 She also told you that these data were compiled for 10,000 inventory items that were carried or held during the year. You…arrow_forwardWhich of the following is one of the assumptions of EOQ model? Group of answer choices Annual demand is known and even throughout the year Orders are received partially There are quantity discounts Multiple items are involved Lead time variesarrow_forwardDream Resorts buys custom - made boxes in bulkand uses them to pack its wine, which it bottles and sells in its on - location Restaurant/ Wine shop. The annual requirement of these boxes is 1200 and each box costs $30. The ordering and carrying costs are $10 per order and 20%, respectively. The supplier from whom Dream Resorts purchases these boxes sells them only in lots of 20, that is, you only purchase quantities in multiples of 20 boxes. Required: a) How many boxes should the confectioner order so as to minimise inventory total stocking costs? b) If the supplier offers 2% discount on the cost of each box when the purchases are in quantities of 300 at a time, should the confectionewr accept this offer? c) Suppose the supplier has decided that instead of the 2% discount offer, a price reduction of $0.25 will be used for the order quantities as shown in Table Q1: Table Q1 Order quantity Cost per box Less than 100 $30.00 100 to 199 $29.75 200 or more $29.50 What order…arrow_forward
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