A local bookstore turns over its inventory once every four months. The bookstore's annual cost of holding inventory is 36 percent. What is the inventory holding cost (in $) for a book that the bookstore purchases for $10 and sells for $18? ANSWER 6 A bicycle manufacturer purchases bicycle seats from an outside supplier for $20 each. The manufacturer's inventory of seats turns over 12.44 times per year, and the manufacturer has an annual inventory holding cost of 32 percent. What is the inventory holding cost (in $) for a bicycle seat? ANSWER

A local bookstore turns over its inventory once every four months. The bookstore's annual cost of holding inventory is 36 percent. What is the inventory holding cost (in $) for a book that the bookstore purchases for $10 and sells for $18? ANSWER 6 A bicycle manufacturer purchases bicycle seats from an outside supplier for $20 each. The manufacturer's inventory of seats turns over 12.44 times per year, and the manufacturer has an annual inventory holding cost of 32 percent. What is the inventory holding cost (in $) for a bicycle seat? ANSWER

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Similar questions

The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
A Mercedes dealer pays $40,000 for each car purchased (wholesale price). The annual holding cost is estimated to be 30% of the dollar value of inventory. The dealer sells an average of 1200 cars per year. They believe that demand is backlogged but estimate that if they are short one car for one year, the loss in future profits is about 10% of the wholesale price. Each time the dealer places an order for cars, ordering costs amount to $1600. Assume there are 360 work days per year. Question: What percent of the time do shortages occur? I've deduced the percent of shortage time to be 25%, but am not sure I've set up my formulas correctly.
I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can. Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8. The replenishment lead time is 14 weeks. Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill. There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum. In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)? *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
Medtronic sells medical devices. The company enjoys many growth opportunities, and so it measures its inventory holding cost at the rate of 25% per year. It currently turns over its inventory 3 times per year. Its gross margin (the difference between revenue and cost) as a percentage of its revenue is an enviable 65%. a. For an item that costs Medtronic $600 to produce, what would be the cost ($s) to hold this item for one year in inventory? b. For an item that costs Medtronic $350 to produce, what is the cost to hold it in inventory ($s)? (Assume it remains in inventory for the average amount of time for the company.)
company sells 20,000 radios evenly throughout the year. The cost of carrying one unit of inventory for one year is P8, and thepurchase order cost per order is P32. What is the economic orderquantity
Arrow Distributing Corp. likes to track inventory by using weeks of supply as well as by inventory turnover. Arrow Distributing Corp. Net Revenue $15,630 Cost of sales $12,190 Inventory $1,090 Total assets $8,770 a) What is its weeks of supply? weeks (round your response to two decimal places). b) What is Arrow's inventory turnover? times per year (round your response to two decimal places). c) Suppose a manufacturer has an inventory turnover of 13.5 times per year. Arrow's supply chain performance relative to the manufacturer's, as measured by inventory turnover, is
You are the operations manager of a firm that uses the continuous review inventory control system. Suppose the firm operates 252 days a year and has the following characteristics for its primary item: Demand = 25,000 units/year Ordering cost = $30/order Holding cost = $1/unit/year Lead time = 4 days Standard deviation in daily demand = 10 units What is the total holding cost per year, including annual holding cost for safety stock (to the nearest whole number)? (Service level=95%) answer is 645 but why?
Do you think the safety stock (safety inventory) could be negative? What is the meaning of a negative safety inventory (hint: safety stock is the difference between the optimal inventory and the average demand)?
A building materials supplier obtains its bagged cement from a single supplier. Demand is reasonably constant throughout the year, and last year the company sold 2,000 tonnes of this product. It estimates the costs of placing an order at around £25 each time an order is placed, and calculates that the annual cost of holding inventory is 20 per cent of purchase cost. The company purchases the cement at £60 per tonne. How much should the company order at a time?
Demand for your product averages 20 units per day, with a standard deviation of 4. Your lead time is 5 days. What should your reorder point be, if you want to have a 95% chance of not running out of products during the lead time? With this reorder level, how much safety stock do you have?
A building materials stockist obtains its cement from a single supplier. Demandfor cement is reasonably constant throughout the year. Last year the company sold 2 000tonnes of cement. It estimates the costs of placing an order at around 25 MU each timean order is placed and charges inventory holding at 20% of purchase cost. The companypurchases cement at 60 MU per tonne.a) How much cement should the company order at a time?b) Instead of ordering EOQ, why not a order convenient 100 tonnes? Please mention formulas and do it in detail so I can understand.
IKEA purchases desks from a supplier in Germany. Their stores in the US sell 4,000 units of desks each month. Each unit costs $300, and the company has an annual holding cost of 20%. Placing a replenishment order incurs clerical costs of $500 per order. Theshipping company charges $1,500 as a fixed cost per shipment. IKEA currently places a replenishment order every two months for 3,000 units. What is the annual ordering cost, annual holding cost, and annual total inventory cost under thecurrent replenishment plan? Group of answer choices 32,000, 272,000, and 240,000 24,000, 264,000, and 240,000 24,000, 240,000, and 264,000 32,000, 240,000, and 272,000