lec 4 handQuestion 1: Sharp Inc manufacturers and supplies painless hypodermic needles. They would like to minimize their inventory costs by determining the optimal number of hypodermic needles to obtain per order. Their annual demand is 1000 units with a set up or ordering cost of $10 per order and a holding cost of $0.50 per unit per year. Assume that each needle costs $10 to purchase. Lead time is 5 working days.
Calculate
a. Optimal order quantity per order (EOQ)
EOQ=Q*=Squareroot((2*(1000)*(10))/0.5 )=200
b. Minimum total annual inventory costs
Total Cost= 10*1000+(1000/200)*10+(200/2)*0.5=10102.325
c. The number of orders per year
N=1000/200=5
d. The time between orders
T=360/5=72
e. The
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Annual carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company: Order Quantity (boxes) | Price per Box | 0–999 | $16 | 1000–2999 | 14 | 3000+ | 12 |
Determine the optimal order quantity and the total annual inventory cost.
Question 7
Question 8: Barbra is in charge of maintaining BX7 supplies at the hospital where the mean demand for it during lead time is 60 (normally distributed) and std dev of 7. a) What is the safety stock if she would like to maintain a 90% service level? b) What is the appropriate reorder point? c) What is the safety stock if she would like to maintain a 95% service level? d) What is the appropriate reorder point? e) What is the safety stock if she would like to maintain a 99% service level? f) What is the appropriate reorder point?
Question 9
Question 10: The store in the previous example sells about 10 digital cameras a day however the lead time is normally distributed with a mean of 6 days and std deviation of 3 days. Find ROP for 90%, 95% and 99% service level.
Question 11: For a 6 pack of batteries, about 150 are sold every day with a std dev of 16 packs. Lead time is normally distributed with average of 5 days and a std dev of 1 day. What is the ROP for 90, 95 and 99% service level.
Question 12: A newsstand sells 120 copies of Global Post every day on average and sales are
3. Identify all costs, other than variable costs, for the trade show distribution strategy. Categorize these costs as investments and fixed costs (per trade show and for fiscal 2005).
State why and when health & safety control equipment identified by the principles of protection, should be used relating to 1st & 2nd fixing components,
Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales = 10,000 units, most likely case in which sales = 20,000 units, and best case in which sales = 30,000 units.
13) Refer to the table. What is the average number of customers in the queue plus the number being served?
1. a. The simulation indicates that 584 is the optimum stocking quantity. Daily profit at this stocking quantity is $331.4346.
Question 4: Take into account the answer to question 1 and the supplier’s new policy outlined in question 2 and the warehouse’s new policy in question 3. Then determine Low’s new EOQ.
You work in marketing for a company that produces work boots. Quality control has sent you a memo detailing the length of time before the boots wear out under heavy use. They find that the boots wear out in an average of 208 days, but the exact amount of time varies, following a normal distribution with a standard
Reorders are placed at the time of review (T), and the safety stock that must be reordered is:
A. The simulated function given in the Excel spreadsheet “Hamptonshire Express: Problem_#1” allows the user to find the optimal quantity of newspapers to be stocked at the newly formed Hamptonshire Express Daily Newspaper. Anna Sheen estimated the daily demand of newspapers to be on a normal standard distribution; stating that daily demand will have a mean of 500 newspapers per day with a standard deviation of 100 newspapers per day. Using the function provided, the optimal stocking quantity, which maximizes expected profit, is determined to be approximately 584 newspapers. If 584 newspapers were to be ordered, Hamptonshire Express will net an
Supplier A: EOQ = Square root of (2 x 1500 x $1,000) = S.R. of 3,000,000 = 209
Littlefield Laboratories has opened a new blood testing lab. This laboratory uses the same process as the lab encountered in your prior assignment, Capacity Management at Littlefield Labs—neither the process sequence nor the process time distributions have changed. The lab began operations with a raw materials inventory of 160 kits and $1,000,000 cash. Customer demand continues to be random, but the expected daily demand will not change during the lab’s life span. Expert advisors know that demand will end abruptly on Day 268 and the lab will no longer be necessary. Any remaining machinery or inventory will be useless after Day 268, and thus have no residual value.
30. The manager of the local National Video Store sells videocassette recorders at discount prices. If the store does not have a video recorder in stock when a customer wants to buy one, it will lose the sale because the customer will purchase a recorder from one of the many local competitors. The problem is that the cost of renting warehouse space to keep enough recorders in inventory to meet all demand is excessively high. The manager has determined that if 90% of customer demand for recorders can be met, then the combined cost of lost sales and inventory will be minimized. The manager has estimated that monthly demand for recorders is normally distributed, with a mean of 180 recorders and a standard deviation of 60. Determine the number of recorders the manager should order each month to meet 90% of customer demand.
1. What is the expected customer lifetime value of a newly acquired customer? Use an annual discount rate of 10%.
Safety Stock: I have concluded to keep our customers happy and to end losing 10% of our demand to our competitors we must maintain a 95% cycle-service
In order to meet both of Northcutt’s objectives of reducing inventory and increasing service levels, Northcutt should implement a continuous review system to manage inventory. Based on the calculations provided in question 2 of the appendix, managers at Northcutt will need to set the reorder point for part FB378 at 118 units and 296 units for part GS131 for the