XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, whoworks in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time anorder is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on.Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $.Assume that the demand is constant throughout the year. (Note: $ is a dollar sign)a) If we are going to use the EOQ inventory model, mention all the assumptions that are made tovalidate that model.b) How many pounds of type A material should Huda order (i.e. Q*) at a time if she wishes to minimizetotal inventory cost?c) How many orders per year would be placed?d) What would the annual ordering cost be?e)What would the average inventory be?f) What would the annual holding cost be?See equations below if needed:AnnualOrderingcostAnnualhdding:Number oforders placedper yearAnnual demandNumber of unitsin each orderAverageinventoryOrdering costper orderOrdering costper order(Carrying costper unit=b.co

For this question, the following data are given, The annual demand is 20000 pounds The ordering…

Answered: a) If we are going to use the EOQ…

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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A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a servicelevel of .98. The order interval is 14 days, and lead time is 2 days. Average demand for one itemis 40 units per day, and the standard deviation of demand is 3 units per day. Given the on-handinventory at the reorder time for each order cycle shown in the following table, determine theorder quantities for cycles 1, 2, and 3.Cycle On Hand1 422 83 103
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?
The weekly demand for a product is 770 units. The standard deviation of dailydemand is 10 units. The firm reviews its inventory every 28 days. Each order for the product arrives 9 days after placement. At the time of review, there are 10 units backorder. If 95 percent of all demand is to be satisfied from items in stock:a) How many units should be the safety stock?b) What’s the product’s inventory status?c) How many units should be ordered for this period?
A part is produced in lots of 1,000 units. It is assembled from 2 components worth $50 total. The value added in production (for labor and variable overhead) is $60 per unit, bringing total costs per completed unit to $110. The average lead time for the part is 6 weeks and annual demand is 3,800 units, based on 50 business weeks per year.a. How many units of the part are held, on average, in cycle inventory? What is the dollar value of this inventory?b. How many units of the part are held, on average, in pipeline inventory? What is the dollar value of this inventory? (Hint: Assume that the typical part in pipeline inventory is 50 percent completed. Thus, half the labor and variable overhead cost has been added, bringing the unit cost to $80, or $50 + $60/2).
A company stocks an item that is consumed at the rate of 20 units each day. Every time an order is placed for new supply, $ 100 must be paid. A unit inventory held in stock will cost $ 0.15. (a) What is the economic order quantity (EOQ)? (b) What is the cycle time for the EOQ? (c) What is the total cost for the EOQ? (d) What is the total cost if the order quantity is 300 more than EOQ? (e) What is the optimum number of orders (rounded to the closest integer) that the company has to place each year? Assume that the company has a standing policy of not allowing shortages in demand.
The O'Neil Shoe manufacturing company will produce a special-style shoe if the order size is large enough to provide a reasonable profit. For each special-style shoe order, the company incurs fixed cost of P2,000 for the production setup. The variable cost is P60 per pair, and each pair sells for P80. How large must the shoe order be before O'Neil will break-even?
Ollah's Organic Pet Shop sells bags of cedar chips for pet bedding or snacking (buyers choice). The supplier has offered the following terms: Order 1-100 bags, and the price is $6.00 a bag. Order 101 or more and the price is $4.50 a bag. Annual demand is 630, fixed ordering costs are $9 per order, and the per bag holding cost is estimated to be around $2 per year. Suppose the lead time for bags is a consistant 2 weeks, and the average weekly demand is 12.6 bags, with a standard deviation of 3.2 bags. If Ollah wants to maintain a 98% service level, what should her reorder point be? please show calculations.
Bell Computers purchases integrated chips at $350per chip. The holding cost is $35 per unit per year, the orderingcost is $120 per order, and sales are steady, at 400 per month. Thecompany's supplier, Rich Blue Chip Manufacturing, Inc., decidesto offer price concessions in order to attract larger orders. Theprice structure is shown in the table. a) What is the optimal order quantity and the minimum annualcost for Bell Computers to order, purchase, and hold theseintegrated chips?b) Bell Computers wishes to use a 10% holding cost rather thanthe fixed $35 holding cost in (a). What is the optimal orderquantity, and what is the optimal annual cost?
Please do G,H,I,J,K and L (a) What is the expected jet fuel yearly average demand D? =4160 tons(b) Given D, find the order lot size Q that gives the economic order quantity (EOQ). =60.39 unit(c) Given the EOQ, what is the total inventory holding cost?= $1067695.2(d) Given the EOQ, what is the total inventory ordering cost? =OC=$1067726.4(e) Given the EOQ, what is the total annual inventory cost?TIC=2135421.6 =1.32(f) What is the time between orders in weeks? = 39.39 The airport is convinced that placing an order every season (every P = 13weeks) will be best. It is also aware that the expected demand will varywith a standard deviation of 20 tons, so it needs to take this information into account. (g) What is the protection period required by the proposed 13-week periodic review system?(h) The airport is required by the airlines to maintain a 99.75% service level.What is the required safety stock?(i) Calculate the order size (Q) when using P = 13.(j) What is the total annual inventory…
A plant manager of a chemical plant must determine the lot size for a particular chemical that has a steadydemand of 30 barrels per day. The production rate is 190 barrels per day, annual demand is 10,500 barrels,setup cost is $200, annual holding cost is $0.21 per barrel, and the plant operates 350 days per year.a. Determine the economic production lot size (ELS).b. Determine the total annual setup and inventory holding cost for this item.c. Determine the time between orders (TBO), or cycle length, for the ELS.d. Determine the production time per lot.What are the advantages of reducing the setup time by 10 percent?
ITEMS 14 and 15 ARE BASED ON THE FOLLOWING INFORMATION: The following information is available for Edgar Corporation's Material X Annual usage 12,600 units Working days per year 360 days Normal lead time 20 days The units of Material X are required evenly throughout the year. 14. What is the reorder point? a. 35 units c. 700 units b. 20th-day d. 630 units 15. Assuming that occasionally, the company experiences delay in the delivery of Material X, such that the lead time reaches a maximum of 30 days, how many units of safety stock should the company maintain and what is the reorder point? Safety Stock Reorder Point a. 350 1,050 b. 350 700 c. 0 1,050 d. 1,050…
An item has a weekly demand of 240 units throughout the year. The item has a unitvalue of $42 and the company uses 20% of the item value for the annual inventorycost. When ordered, the setup cost to produce an order is $600, and the productionprocess is able to produce 500 per week and deliver them weekly as produced.What is the economic order quantity?

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a) If we are going to use the EOQ inventory model, mention all the assumptions that are made to validate that model. b) How many pounds of type A material should Huda order (i.e. Q*) at a time if she wishes to minimize total inventory cost? c) How many orders per year would be placed?