3. Fortnex is a company that assembles small household appliances including coffeemakers, toasters, and food mixers. The parent company of Fortnex has been concernedabout the rising product cost of the finished products, which has led to reduced profitmargins. One of the demands of the parent company has been to review the inventorymanagement practices of Fortnex. Two areas which Fortnex is currently investigating areeconomic order quantity EOQ and ABC analysis. Perform the following.(i)At present the company purchases copper wire for a certain appliance undereconomic order quantities based on the information given in Table 3-1. Thesupplier of copper wire is proposing a discount of 5% of unit price if Fortnexpurchases in lot sizes of 1000 kg. rather than the calculated EOQ. Determine ifFortnex should take advantage of the price discount. Justify your response.For a particular series of referenced products, the number of units used a year,and the unit cost are as shown in Table 3-2. Develop an ABC analysis and plot aPareto chart to help Fortnex company to which items to give maximum and leastattention.(ii) Annual demand forcopper wire, kgPrice per kg, OMROrdering cost,OMR/orderCarrying cost, % ofpriceProduct referenceQ4587G458G235Z5892B7894C1289Table 3-150375700875Table 3-2Units a year110260Unit Cost(OMR/unit)258.420.42.41.10.362.451020%12,100Total Cost(OMR)2,7502,1841,020900770315

Given data: As per the question, the supplier is giving the discount = 5% on the unit price (if the…

Answered: 3. Fortnex is a company that assembles…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 15P

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XYZ Company is specialized in mangoes distribution in the city of Muscat. Sales are 500 boxes (unit) per month. It costs OR 10 to make and receive an order and holding cost is OR 2.5 per box per year. The prices depend on quantities purchased such that the order quantities from 1 to 199 at price RO 5; quantity 200 to 499 at a unit price 4.5 RO; and quantity 500 and more at a per unit price of 4 RO. What is the Economic Order Quantity (EOQ) while not consider the purchase cost? Round - up to the nearest integer?? a. 199 units O b. None is correct 500 units d. 180 units e. 220 units
A local outdoor vegetable stand has exactly 1,000 square feet of space to displaythree vegetables: tomatoes, lettuce, and zucchini. The appropriate data for theseitems are given in the following table.ItemTomatoes Lettuce ZucchiniAnnual demand 850 1,280 630(in pounds)Cost per pound $0.29 $0.45 $0.25The setup cost for replenishment of the vegetables is $100 in each case, and thespace consumed by each vegetable is proportional to its costs, with tomatoes requiring 0.5 square foot per pound. The annual interest rate used for computingholding costs is 25 percent. What are the optimal quantities that should be purchased of these three vegetables?
Omega DB Corp. has a policy of maintaining an inventory of finished goods equal to 40 percent of the next month’s budgeted sales. If Omega DB Corp. plans to produce 6,000 units in June, what are budgeted sales for July in units? Budgeted sales for the first six months of 2019 for Omega DB Corp. are listed below: Units:JANUARY 6,000FEBRUARY 7,000MARCH 8,000APRIL 7,000MAY 5,000JUNE 4,000
ABC Company has correctly computed its economic order quantity at 1,000 units; however, management feels it would rather order in quantities of 1,500 units. How should ABC’s total annual purchase order cost and total annual carrying cost for an order quantity of 1,500 units compare to the respective amounts for an order quantity of 1,000 units? A. Lower purchase order cost and lower carrying cost B. Lower purchase order cost and higher carrying cost C. Higher purchase order cost and higher carrying cost D. Higher purchase order cost and lower carrying costs
Problem 20-40 (Algo) In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,600 11 $ 13,200 2 12,200 12 700 3 2,300 13 42,400 4 50,500 14 10,100 5 11,600 15 1,300 6 900 16 10,400 7 2,100 17 4,100 8 11,200 18 61,600 9 5,200 19 3,600 10 15,200 20 3,000 a. Classify each item in inventory using an ABC plan.
The office manager for the Metro Life Insurance Companyorders letterhead stationery from an office products firm inboxes of 500 sheets. The company uses 6500 boxes peryear. Annual carrying costs are $3 per box, and orderingcosts are $28. The following discount price schedule isprovided by the office supply company: Order Quantity (boxes) Price per Box200–999 $161000–2999 143000–5999 136000 12 Determine the optimal order quantity and the total annualinventory cost.
The demand for a clothing brand is shown in the table below. The cost per order is about $4000. Cost of each unit of clothing = $5. Carrying cost percentage = 25% per item per 5 months. The analysis period = 5 month duration. Month Demand 1 400 2 300 3 200 4 400 5 500 a. Using this data, compute the solutions using the Lot for Lot and Periodic Order Quantity heuristics? Which of these heuristics would perform better and why? b. Assuming that the demand follows a normal distribution with the mean and variance from the data given above, determine the optimal order should be greater or lesser than the single period EOQ model.
Consider that you work at Kroger Grocery store, and that you've been tasked with creating an ABC inventory classification for 6 items. The 6 items, as well as their profit per case and number of cases sold per week, are as follows:Ribeye Steak - $135 in profit per case, 3 cases sold per weekLobster Tail - $245 in profit per case, 3 cases sold per weekPasta - $23 in profit per case, 12 cases sold per weekSalt - $3 in profit per case, 2 cases sold per weekNapkins - $12 in profit per case, 2 cases sold per weekTomato Sauce - $23 in profit per case, 11 cases sold per weekUsing total weekly profits, please classify each products into A, B, or C categories. Which items form the boundary of the class A and B items in your classification, and why? Which items form the boundary of the class B and C items in your classification, and why?
1 Independent demand items are ______. a products in demand in countries that have declared their independence b products whose demand does not depend on demand for other finished products c products that are in demand irrespective of the price of the product d products that are in demand irrespective of the quality of the product 2 One of the assumptions of the EPQ (Economic Production Quantity) model is ______. a that there are several different products involved b that production runs to replenish inventory occur at regular intervals c that the lead time for the receipt of orders varies depending on the order d that there are large discounts available at higher volumes 3 If we are producing the product or component in-house, then the total inventory-related cost on an annual basis is ______. a the sum of total annual setup cost and total annual holding cost less the sum of total annual stock-out cost and total annual materials purchase cost b the…
The maintenance department of a large hospital uses about 816 cases of liquid cleanserannually. Ordering costs are $12, carrying costs are $4 per case a year, and the new priceschedule indicates that orders of less than 50 cases will cost $20 per case, 50 to 79 caseswill cost $18 per case, 80 to 99 cases will cost $17 per case, and larger orders will cost $16per case. Determine the optimal order quantity and the total cost.
Exercise 2: The demand per year (D) for product X is 12,100 units. The costs of placing an order (S) are $4.50. The unit cost (C) of the item is $25.00. The maintenance cost (H) per unit per year is 30% of the item's cost. 1. Use the economic order quantity (EOQ) model to determine: *Optimal quantity to order* The expected number of orders*Optimal time between orders*The total annual cost of maintaining that optimal amountNOTE: Show calculations of how you arrived at each amount 2. Answer, what are the potential benefits of using EOQ analysis for inventory management? How can you help businesses strike a balance between inventory holding costs and ordering costs?
3. Cynthia Knott’s oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $12 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $1 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 100 pounds and a standard deviation of 15 pounds. a) What is the cost of underestimating demand for each pound? b) What is the overage cost per pound? c) How many pounds of oyster should she order each day? d) What is the stockout risk for this order size?

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