A firm orders on average 400 wheels each month. Demand is normally distributed with standard deviation of the monthly demand being 20 wheels. The ordering cost is $8 per order. The cost to buy one wheel is $4 per wheel. Annual carrying costs are 50% of unit cost. The supplier lead time is 2 operating days. The firm operates 240 days per year, in other word, the firm operates 20 days each month. Each order is received from the supplier in a single delivery. There are no quantity discounts. 1h. What is the standard deviation of demand during lead time period?
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A firm orders on average 400 wheels each month. Demand is normally distributed with standard deviation of the monthly demand being 20 wheels. The ordering cost is $8 per order. The cost to buy one wheel is $4 per wheel. Annual carrying costs are 50% of unit cost. The supplier lead time is 2 operating days. The firm operates 240 days per year, in other word, the firm operates 20 days each month. Each order is received from the supplier in a single delivery. There are no quantity discounts.
1h. What is the standard deviation of demand during lead time period?
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- Rocky Mountain Tire Centre sells 20,000 tires of a particular type per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20. per tire if fewer than 500 tires are ordered, $18. Per tire if more than 500 but fewer than 1,000 tires are ordered and $17. per tire if 1,000 or more tires are ordered. How many tires should Rocky Mountain order each time it places an order? Quantity Unit Price 1-499 $20. 500-999 $18. 1000 & over $17 Based on available information, lead time demand for CD-ROM drives averages 50 units (normally distributed), with a standard deviation of 5 drives. Management wants a 97% service level. What value of Z should be applied? How many drives should be carried as safety stock?Geox Ltd buys shoes from a supplier in Italy and sells them on to retailers in Australia. Geox Ltd currently uses an EOQ model to determine the number of shoes to send to order. The annual demand for shoes is approximately 45,600. The ordering cost is $55 per order. The annual cost of physically storing shoes is $8.75 per unit. The insurance on the inventory (shoes) cost is $4.25 per unit. The opportunity cost (annual ROI 25% x $30) is $7.50 per unit. The accountant of Geox Ltd, Richard Branson, recently attended a seminar on Just-in-Time (JIT) and is considering how the ideas of JIT differ from traditional techniques like EOQ and how they may help to manage inventory more efficiently. REQUIRED: A) Use the EOQ model to determine the optimal number of shoes per order. (show calculations) B) If it takes two weeks to receive an order, at what point should Geox Ltd reorder shoes? (show calculations) C) Geox Ltd has determined that demand may vary from the average by up to 25%. To handle…A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. Demand is normally distributed with standard deviation of the monthly demand being 200 bags. The shop pays $12 for each bag to the supplier. The cost of ordering and receiving shipments is $12 per order. Accounting estimates annual inventory carrying cost is 30% of its value. The supplier lead time is a constant of 2 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses continuous review (i.e., fixed-order quantity) inventory system and pays the supplier when the order is delivered (i.e., cash on delivery). There are no quantity discounts. Please keep two decimal places in all your calculations. How many times per year will the shop order on average?
- A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. Demand is normally distributed with standard deviation of the monthly demand being 200 bags. The shop pays $12 for each bag to the supplier. The cost of ordering and receiving shipments is $12 per order. Accounting estimates annual inventory carrying cost is 30% of its value. The supplier lead time is a constant of 2 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses continuous review (i.e., fixed-order quantity) inventory system and pays the supplier when the order is delivered (i.e., cash on delivery). There are no quantity discounts. Please keep two decimal places in all your calculations. What is the store’s minimum total annual cost of placing orders & carrying inventory (cycle stock)?A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. Demand is normally distributed with standard deviation of the monthly demand being 200 bags. The shop pays $12 for each bag to the supplier. The cost of ordering and receiving shipments is $12 per order. Accounting estimates annual inventory carrying cost is 30% of its value. The supplier lead time is a constant of 2 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses continuous review (i.e., fixed-order quantity) inventory system and pays the supplier when the order is delivered (i.e., cash on delivery). There are no quantity discounts. Please keep two decimal places in all your calculations. What quantity should the shop order with each order? How many times per year will the shop order on average? How many operating days will elapse on average between two…A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. Demand is normally distributed with standard deviation of the monthly demand being 200 bags. The shop pays $12 for each bag to the supplier. The cost of ordering and receiving shipments is $12 per order. Accounting estimates annual inventory carrying cost is 30% of its value. The supplier lead time is a constant of 2 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses continuous review (i.e., fixed-order quantity) inventory system and pays the supplier when the order is delivered (i.e., cash on delivery). There are no quantity discounts. Please keep two decimal places in all your calculations. The company currently carries a safety stock of 50 bags. What is the annual cost to carry the safety stock of 50 bags?