Solution to Case Problem Specialty Toys Essay example

EOQ is used to find the optimal order quantity so that the annual inventory cost 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

| Immediate result. If no merchandising loss, Kingsford obtain $1.87 billion of profit. With merchandising loss there is still a $1.72 billion profit.

Supplier A: EOQ = Square root of (2 x 1500 x $1,000) = S.R. of 3,000,000 = 209

We also need to make sure that Obermeyer honors the minimum order quantity required by the Hong Kong’s supplier. We can multiply the recommended optimal ordering level for each style by (20000/26360) thus ensuring that the total sum will exceed 20000 but which may not maximize profits.

4. a. The optimal stocking quantity is 409 according to the spreadsheet in the simulation, which is a decrease from 516 in problem #3 because in the event that the Express stocks out, Ralph still makes a profit from 40% of customers who will buy the Private. Therefore, because he makes more profit off of the Private, his risk decreases because of cost of understocking of the Express.

Aver. level of inventory = (200 u / 2) + [(800 u x 10) /365]

Compute the probability of a stock-out for the order quantities suggested by members of the management team.

Milligan’s Backyard Storage Kits, a mail order company, sells a variety of backyard storage unit kits and landscaping decorations to its customers. Although the company makes a profit, David Milligan, the company’s owner, realizes that he can improve his company’s operations if he better manages his inventory. Mr. Milligan requests your help in preparing an Inventory Analysis worksheet. The Inventory Analysis worksheet provides Mr. Milligan with information about his annual sales, cost of goods sold, gross profit, and markup on this products. Preparing the worksheet for Mr. Milligan requires you to insert columns, use several functions, and apply proper formatting to the

When the market size changes from 120,000 to 110,000, the cash flow and NPV will be as the flowing:

Since the expected standard deviation is twice the standard deviation of the forecast samples, we can find the proportion of the time that the actual value of demand will be within a certain range. Because of our k value, our orders are all around 1 standard deviation below the mean, meaning that about 12% of the actual observations will fall below these orders. In that case, Sport Obermeyer would lose money based on the extra units. If demand falls less than 600 units above the initial order, we have a similar problem in the second ordering stage - Obermeyer cannot effectively adjust its order size to fit the reevaluated demand. Based on the cost of each item, which we ignored in our analysis, we could calculate the expected over-ordering from each item and find the ideal level, similar to the outside analysis that we found.

Question 2: Assume all conditions in question 1 hold, except that Low’s supplier now offers a quantity discount in the form of absorbing all or part of Low’s order processing costs. For orders of 750 or more kegs of nails, the supplier will absorb all the order

Assuming weekly periodic review replenishment, a Lead time equal to four and a half weeks and a policy of satisfying 98 percent of customers demand from items in stock the safety stock would be:

Once they have their inventory under control, the purchasing department should complete a very detailed cost analysis to determine the total inventory cost, including all aspects and hidden fees. Once they have the

Let's assume that the expected sales distribution is normally distributed, with a mean of 20,000, and 95% falling within 10,000 and 20,000.