ABC Ltd. makes cookies which it sells at taka 8 per dozen in special boxes containingone dozen each. The direct cost of cookies for the firm is taka 4.50 per dozen. At theend of the week the stale cookies are sold off for a lower price of taka 2.50The overhead expenses attribute to cookies production are taka 1.25 per dozen. Freshcookies are sold in special boxes which cost 50 paise each and the stale cookies aresold wrapped in ordinary paper. The probability distribution of demand per week is asper dozen.under:Demand (in dozen)ProbabilityRequirements:i.12340.010.140.20.50.10.05Find the optimum production level of cookies per week.ii.Determine the Expected monetary value, expected opportunity loss, andexpected value of perfect information.

Given data: Demand (dozens) Probability 0 0.01 1 0.14 2 0.20 3 0.50 4 0.10 5…

Answered: ABC Ltd. makes cookies which it sells…

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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Dorothy’s pastries are freshly baked and sold at several spe-cialty shops throughout Perth. When they are a day old, theymust be sold at reduced prices. Daily demand is distributedas follows:Each pastry sells for $1.00 and costs $0.60 to make. Each onenot sold at the end of the day can be sold the next day for$0.30 as day-old merchandise. How many pastries should bebaked each day?
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?
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?
In the last 12 months the quantities shown inTable 1 of light vehicles of a brand "R" were sold in the national territory.The selling price of each R vehicle is 12590€. The production cost(including raw material cost) of one is 7730€. The company usesown transportation to transport the vehicles worth 420€, andgiven the distance to the factory, takes on average, 8days, with a standard deviation of 2 days. Storage until saleis estimated at 150€/unit.year. The companyfinancial loans at an annual rate of 2.2%. Consider that ayear has 264 working days.a) Determine the economic order quantity.b) Consider that a service level of 85% (Z=1.036) is to be ensured using a continuous reviewinventory management policy of continuous review. Determine:i. The order point.ii. The economic order quantity considering stock-outs. Month Sales Month Sales 1 2235 7 3078 2 3206 8 2366 3 4298 9 1966 4 3309 10 2149 5 3640 11 2387 6 4038 12 2492
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
The Ambrosia Bakery makes cakes for freezing and subse-quent sale. The bakery, which operates five days a week, 52 weeks a year, can produce cakes at the rate of 116 cakesper day. The bakery sets up the cake-production operationand produces until a predetermined number (Q) have beenproduced. When not producing cakes, the bakery uses itspersonnel and facilities for producing other bakery items.The setup cost for a production run of cakes is $700. Thecost of holding frozen cakes in storage is $9 per cake per year. The annual demand for frozen cakes, which is con-stant over time, is 6000 cakes. Determine the following: a. Optimal production run quantity (Q)b. Total annual inventory costsc. Optimal number of production runs per yeard. Optimal cycle time (time between run starts)e. Run length in working days
The purchasing manager for the Pacific Steel Companymust determine a policy for ordering coal to operate 12converters. Each converter requires exactly 5 tons of coalper day to operate, and the firm operates 360 days per year.The purchasing manager has determined that the orderingcost is $80 per order, and the cost of holding coal is 20% ofthe average dollar value of inventory held. The purchasingmanager has negotiated a contract to obtain the coal for$12 per ton for the coming year.a. Determine the optimal quantity of coal to receive in eachorder.b. Determine the total inventory-related costs associatedwith the optimal ordering policy (do not include the costof the coal).c. If five days’ lead time is required to receive an order ofcoal, how much coal should be on hand when an order isplaced?
The purchasing manager for the Pacific Steel Companymust determine a policy for ordering coal to operate 12converters. Each converter requires exactly 5 tons of coalper day to operate, and the firm operates 360 days per year.The purchasing manager has determined that the orderingcost is $80 per order, and the cost of holding coal is 20% ofthe average dollar value of inventory held. The purchasingmanager has negotiated a contract to obtain the coal for$12 per ton for the coming year.a. Determine the optimal quantity of coal to receive in eachorder.b. Determine the total inventory-related costs associatedwith the optimal ordering policy (do not include the costof the coal).
TheWod Chemical Company produces a chemical compound that is used as a lawn fertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annual demand for the compound is 0.6 million pounds per year. The fixed cost of setting up for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to account for the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.a. What is the optimal size of the production run for this particular compound?b. What proportion of each production cycle consists of uptime and what proportion consists of downtime?c. What is the average annual cost of holding and setup attributed to this item? If the compound sells for $3.90 per pound, what is the annual profit the company is realizing from this item?
The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.b. What proportion of each production cycle consists of uptime and what proportionconsists of downtime?
The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.c. What is the average annual cost of holding and setup attributed to this item? Ifthe compound sells for $3.90 per pound, what is the annual profit the companyis realizing from this item?
The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.a. What is the optimal size of the production run for this particular compound?

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