4.The FCC Cafeteria, a fast lunch spot in Çankaya University campus, purchases several basic cookingingredients from a supplier. The annual usage (demand), purchasing cost, and setup (order) cost of theseingredients are given in the table below. The inventory carrying rate is 0.10 per unit per year.IngredientAnnual Demand (in units)Purchasing Cost ($ / unit)Setup Cost ($ / order)134100100200100104010102243(a) Assume that all ingredients are ordered independently. For each ingredient, determine the optimalcycle time and order quantity. Calculate the associated total cost of all ingredients.(b) Assume that all ingredients are ordered independently, and the cafeteria management wants to limittheir annual inventory holding cost by $52.5. Using Lagrange multiplier technique, determine theoptimal cycle time and order quantity for each ingredient. Calculate the associated total cost of allingredients.(c) Assume that all ingredients have a fixed (common) order cycle. Determine the optimal cycle time, theorder quantity for each ingredient, and the associated total cost. Draw a figure that illustrates thechange in inventory levels of the ingredients.

Economic order quantity (EOQ) is a computation that businesses use to determine their ideal order…

Answered: (a) Assume that all ingredients are…

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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Fruitcake Specialists sells 36,000 fruit cakes annually. Annual carrying costs are P5 per fruit cake and the ordering costs are P100 per order. The firm has decided to maintain a safety stock of one month's sales or 3,000 fruit cakes. The delivery time per order is 5 days. Assume a 365-day a year. What is the EOQ? What is the average inventory? How many orders should be placed each year? What is the total inventory cost? What is the re-order point?
Michaela Bag, engaged in reselling school bags is having problems when it comes to managing its inventory quantities. Most of the time, Michaela Bag would run out of bags because she would order too few quantities. Their annual requirement, as forecasted by its proprietress, is 24,000 bags. The costs associated with carrying every unit of school bag would be ₱7. It is estimated that each order from her supplier will cost ₱300. Compute for Michaela Bag economic order quantity.
The mythical Own Distributors has an annual demand of 2,000 units for itshandheld security wands. The average cost of the handheld security wand isUS$140. Carrying cost is 18% of the unit cost of the security wand. Orderingcosts are US$30 per order. If the company orders in quantities of 500 or more,it can get a 6% discount on the unit cost of the security wand. Should the OwenDistributors take the quantity discount?
Arthur Meiners is the production manager ofWheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 10,000 wheelbearings each year. This order has been stable for some time.Setup cost for Wheel-Rite is $40, and holding cost is $.60 perwheel bearing per year. Wheel-Rite can produce 500 wheel bearings per day. Cal-Tex is a just-in-time manufacturer andrequires that 50 bearings be shipped to it each business day.a) What is the optimum production quantity?b) What is the maximum number of wheel bearings that willbe in inventory at Wheel-Rite?c) How many production runs of wheel bearings will WheelRite have in a year?d) What is the total setup 1 holding cost for Wheel-Rite?
Johnson Peters holds the position of operations manager for a small container and bottle manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is 15% of the unit price. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat. G.Including the cost of the 8,000 units. What is the annual cost of the inventory? H.What is the total annual cost? I. What is the re-order point? PLEASE DO NOT WRITE RESPONSES ITIS TOO HARD TO UNDERSTAND
Johnson Peters holds the position of operations manager for a small container and bottle manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is 15% of the unit price. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat. A.What is the Economic Order Quantity? B.What is the average inventory if the Economic Order Quantity is used? C. What is the optimal number of orders per year?
Johnson Peters holds the position of operations manager for a small container and bottle manufacturing company. His job description includes managing inventory levels, supervision of operation, leading his team etc. Annually there is usually a quick turn over of inventory items. One of the main items (bottle caps) have a demand of 8,000 units per day. The actual cost of each unit is $150, and the inventory holding cost per years is 15% of the unit price. The average setup cost is $17.85. There are 300 working days per year, and it takes an order about 5 days to arrive by boat. D.What is the optimal number of days in between any two orders?E.What is the annual cost of ordering?F.What is the annual cost of holding inventory? PLEASE DO NOT WRITE RESPONSES IT IS HARD TO UNDERSTAND
The john equipment company estimates its carrying cost at 15% and its ordering cost at $90 per order. The estimated annual requirement is 78,000 units at a price of $4 per unit. (i). What is the most economical no. of units to order?(ii). No. of orders to be placed in a year.(iii). About how often will an order need to be placed?
Controlling inventory is one of Wheeled Coach’s toughest problems. Operating according to a strategy of mass customization and responsiveness, management knows that success is dependent on tight inventory control. Anything else results in an inability to deliver promptly, chaos on the assembly line, and huge inventory investment. Wheeled Coach finds that almost 50% of the cost of every ambulance it manufactures is purchased materials. A large proportion of that 50% is in chassis (purchased from Ford), aluminum (from Reynolds Metal), and plywood used for flooring and cabinetry construction (from local suppliers). Wheeled Coach tracks these A inventory items quite carefully, maintaining tight security/control and ordering carefully so as to maximize quantity discounts while minimizing on-hand stock. Because of long lead times and scheduling needs at Reynolds, aluminum must actually be ordered as much as 8 months in advance. In a crowded ambulance industry in which it is the only giant,…
Arthur Meiners is the production manager of Wheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 10,000 wheel bearings each year. This order has been stable for some time. Setup cost forWheel-Rite is $40, and holding cost is $.60 per wheel bearing per year. Wheel-Rite can produce 500 wheel bearings per day. Cal-Tex is a just-in-time manufacturer and requires that 50 bearings be shipped to it each business day.a) What is the optimum production quantity?b) What is the maximum number of wheel bearings that will be ininventory at Wheel-Rite?c) How many production runs of wheel bearings will Wheel-Ritehave in a year?d) What is the total setup 1 holding cost for Wheel-Rite?
A service garage uses 204 boxes of cleaning cloths a year. The boxes cost $12 each. The cost to place one order is $15, and the cost to hold one box in inventory for a year is $2.40. The EOQ is
Controlling inventory is one of Wheeled Coach’s toughest problems. Operating according to a strategy of mass customization and responsiveness, management knows that success is dependent on tight inventory control. Anything else results in an inability to deliver promptly, chaos on the assembly line, and a huge inventory investment. Wheeled Coach finds that almost 50% of the cost of every ambulance it manufactures is purchased materials. A large proportion of that 50% is in chassis (purchased from Ford), aluminum (from Reynolds Metal), and plywood used for flooring and cabinetry construction (from local suppliers). Wheeled Coach tracks these A inventory items quite carefully, maintaining tight security/control and ordering carefully so as to maximize quantity discounts while minimizing on-hand stock. Because of long lead times and scheduling needs at Reynolds, aluminum must actually be ordered as much as 8 months in advance. In a crowded ambulance industry in which it is the only…

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