36. The president of Value Filters became very enthusiastic about using EOQS to plan thesizes of her production runs, and instituted lot sizing based on EOQ values before shecould properly estimate costs. For one particular filter line, which had an annual de-mand of 1,800 units per year and which was valued at $2.40 per unit, she assumed aholding cost based on a 30 percent annual interest rate and a setup cost of $100. Sometime later, after the cost accounting department had time to perform an analysis, itfound that the appropriate value of the interest rate was closer to 20 percent and thesetup cost was about $40. What was the additional average annual cost of holding andsetup incurred from the use of the wrong costs?

Answered: Image /qna-images/answer/c2fd8f6a-8dab-4114-bd1a-07aa83908fe2.jpg

Answered: 36. The president of Value Filters…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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47.The role of safety stock in an organization is to a. reduce the lead time for an order to be received. b. reduce the probability of a stock out. c. reduce the order point. d. manage the economic order quantity.
Suppose that a publishing company periodically replenish its supply of paper stock. The paper comes in large rolls and that the printer uses 90 rolls per quarterly. The cost of one roll paper is OMR 150. The cost of replenishment is OMR 10 per order. The cost of keeping the paper on hand, including rent for space occupied, insurance, and interest on the capital tied up is 10 percent per roll per year. Calculate:I. The EOQ. 2)No. of orders in a year. 3) Time between two successive orders 4)Average yearly cost of Inventory 5)Total inventory cost 6)Total Cost
Suppose that a publishing company periodically replenish its supply of paper stock. The paper comes in large rolls and that the printer uses 60 rolls per bi-month. The cost of one roll paper is OMR 150. The cost of replenishment is OMR 10 per order. The cost of keeping the paper on hand, including rent for space occupied, insurance, and interest on the capital tied up is 10 percent per roll per year. Calculate: The EOQ. No. of orders in a year, and Time between two successive orders Average yearly cost of Inventory Total inventory cost Total Cost
1. The monthly demand for a part is 1,500 units. The order cost is $285 per order, the holding cost is $56 per unit per year and the part cost is $850 per unit. The firm operates twelve months per year. Compute the (a) EOQ, (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. 2. The weekly requirement of a part is 950 units. The order cost is $85 per order, the holding cost is $5 per unit per year and the part cost is $250 per unit. The firm operates fifty-two weeks per year. Compute the (a) EOQ, (b) annual holding cost, (c) annual order cost, and (d) annual total inventory cost. 3. Given the following information, compute the economic order quantity, annual holding cost, annual order cost and annual total inventory cost.Annual requirements (R) = 50,000 unitsOrder cost (S) = $150 per orderHolding rate (k) = 15%Unit cost (C) = $100 per unit
For each of the following costs, indicate whether the cost would be an out-of-pocket carrying cost (C), or a cost of placing an order (P). If the item does not qualify for either of these categories, note that it as none of the above (N) Assume that wages vary with the level of work while salaries are fixed for a monthly or longer time period.1.Hourly fee for inventory audit. 2. Salary of purchasing supervisor.3. Costs to audit purchase orders and invoices, on a per-order basis.4. Taxes on inventory.5. Stockout costs.6. Storage costs charged per unit in inventory.7. Fire insurance on inventory.8. Fire insurance on warehouse.9. Obsolescence costs on inventory. 10. Shipping costs per shipment.
Economic Order Quantity and Reorder PointFind the economic order quantity and the reorder point, givenAnnual demand ( D )= 1, 000 unitsAverage daily demand ( d¯ ) = 1, 000 ∕365ordering cost ( S ) = $5 per orde rHolding cost ( H ) = $1.25 per unit per yearLead time ( L ) = 5 daysCost per unit ( C ) =$12.50What quantity should be ordered?
1.An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. Theannual demand is approximately 1,400 batteries. The supplier pays $32 for each batteryandestimates that the annual holding cost is 30 percent of the battery's value. It costs approximately$25 to place an order (managerial and clerical costs). The supplier currently orders 140batteriesper month. Determinetheordering, holding, andtotal inventory costs forthe currentorderquantity. Determine the economic order quantity (EOQ). How many orders will be placed per year using the EOQ? Determine the ordering, holding, and total inventory costs for the EOQ. Howhas ordering cost changed? Holding cost? Total inventory cost?
Westside Auto purchases a component used in the manufacturing of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1,000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Eastside has 250 working days per year and a lead time of 10 days. a) What is the EOQ for this component? b) What is the cycle time? c)
Race One Motors is an Indonesian car manufacturer. Atits largest manufacturing facility, in Jakarta, the company producessubcomponents at a rate of 300 per day, and it uses these subcomponentsat a rate of 12,500 per year (of250 working days). Holding costsare $2 per item per year, and orde1ing (setup) costs are $30 per order.a) What is the economic production quantity?b) How many production runs per year will be made?c) What will be the maximum inventory level?d) What percentage of time will the facility be producing components?e) What is the annual cost of ordering and holding inventory?
A bey Kuru villa, of Parkside Plumbing, uses I ,200 ofa certain spare part that costs $25 for each order, with an annualholding cost of $24.a) Calculate the total cost for order sizes of25, 40, 50, 60, and 100.b) Identify the economic order quantity and consider the implicationsfor making an error in calculating economic orderquantity.
A company will begin stocking remote control devices. Expected monthly demand is 800 units. Thecontrollers can be purchased from either supplier A or supplier B. Their price lists are as follows:SUPPLIER A SUPPLIER BQuantity Unit Price Quantity Unit Price1–199 $14.00 1–149 $14.10200–499 13.80 150–349 13.90500 + 13.60 350 + 13.70 Ordering cost is $40 and annual holding cost is 25 percent of unit price per unit. Whichsupplier should be used and what order quantity is optimal if the intent is to minimize totalannual costs?
A manufacturing company produces two products X and Y. Each product X requires one A and two Bs. Each B requires one C and one D. Each product Y requires 1 C and 4Ds. Table Q5A shows data from the inventory records of components. Table Q5A Data category A B C D Lot - sizing rule Fixed order quantity = 250 Lot for lot Lot for lot Fixed order quantity = 1000 Lead time 3 weeks 2 weeks 1 week 2 weeks Beginning inventory 70 0 200 800 The MPS for products X and Y is given in Table Q5B. The on-hand inventories are as follows: X = 100, Y = 30. The only scheduled receipts are 250 units of X in period 2.The lead times are as follows: X = 2 weeks, Y = 3 weeks. The chase strategy is used for both products. Table Q5B Demand in period Product SS 1 2 3 4 5 6 7 8 X 50 300 200 250 Y 30 400 Required: a) Draw a product structure tree for each product. b) Develop…

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