Answer the following activity: 1. Assume that the following quantity discount schedule is appropriate. If annual demand is 120 units, ordering costs are $20 per order, and the annual holding cost rate is 25%, what order quantity would you recommend? Order Size O to 49 50 to 99 100 or more Unit Cost $30.00 $28.50 $27.00 Discount (%) 5 10

Answer the following activity: 1. Assume that the following quantity discount schedule is appropriate. If annual demand is 120 units, ordering costs are $20 per order, and the annual holding cost rate is 25%, what order quantity would you recommend? Order Size O to 49 50 to 99 100 or more Unit Cost $30.00 $28.50 $27.00 Discount (%) 5 10

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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1.) Assume a certain product has an order cost of $12. Holding cost is $1 per product to hold for a year. Monthly demand is 200 units. Which of the following ordering plans would you use to minimize the Total Inventory Cost? a. Make one order each year b. Make one order per quarter c. Make one order each month d. Make one order each week e. Make 9 orders per year. f. None of the above (what is your answer?)
Please complete the problem usinf EXCEL, Show ALL formulas Demand for a popular athletic shoe is nearly constant at 800 pairs per week for a regional division of a national retailer. The cost per pair is $54. It costs $72 to place an order, and annual holding costs are charged at 22% of the cost per unit. The lead time is two weeks. a. What is the EOQ? b. What is the reorder point? c. What is the cycle time? d. What is the total annual cost?
The sales of Whole Care mouthwash at Tom's of Maine over the past six months have averaged 2,000 cases per month, which is the current order quantity. Tom's of Maine's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions a) What is EOQ? b) What is the cost reduction? c) What is the reorder point? d) What is Time between Orders (TBO)?
Tacky Souvenirs sells lovely handmade tablecloths at its islandstore. These tablecloths cost Tacky $15 each. Customers wantto buy the tablecloths at a rate of 240 per week. The companyoperates 52 weeks per year. Tacky, the owner, estimates hisordering cost at $50. Annual holding costs are 20 percent of theunit cost. Lead time is 2 weeks. Using the information given,(a) Calculate the economic order quantity.(b) Calculate the total annual costs using the EOQ.(c) Determine the reorder point.
G-Tech’s monthly demand is 1000 units. You are in charge of the inventory department. You know that the holding cost is $100 per unit and ordering cost is $4,000 per order. What is the EOQ? 2. What is the number of orders per year? 3. What is the annual holding cost? (not Total cost, just the holding cost portion! 4. If we decide to order a quantity of 1000 units instead of the EOQ, what happens to the annual holding cost? (Just tell me in words – could be 3 short words!)
Design your own inventory management problem with the required input data and answer the following questions : a. What is the optimal order size? b. What is the optimal number of orders per year? What is the optimal number of days between orders? d. What is the annual inventory cost? e. If the lead time were X days/weeks/months, what would be the reorder point? f. For what value of ordering cost would Y units of order size be optimal?
The M&A Hobby Shop carries a line of radio-controlled model trains. Demand for the trains is assumed to be constant at a rate of 40 cars per month. The trains cost $60 each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%.a. Determine the economic order quantity and total annual cost under theassumption that no backorders are permitted.b. If the lead time is six days, what is the reorder point? Assume a yearconsists of 300 days
Emery Pharmaceutical uses an unstable chemicalcompound that must be kept in an environment where both temperatureand humidity can be controlled. Emery uses 800 poundsper month of the chemical, estimates the holding cost to be 50%of the purchase price (because of spoilage), and estimates ordercosts to be $50 per order. The cost schedules of two suppliers areas follows: a) What is the economic order quantity for each supplier?b) What quantity should be ordered, and which supplier should be used?c) What is the total cost for the most economic order size?d) What factor(s) should be considered besides total cost?
The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 40 cars per month. The carscost $60 each, and ordering costs are approximately $15 per order, regardless of theorder size. The annual holding cost rate is 20%.a. Determine the economic order quantity and total annual cost under theassumption that no backorders are permitted.b. If the lead time is six days, what is the reorder point? Assume a yearconsists of 300 days.
Based on an EOQ-type ordering criterion, what costmust be taken to zero if the desire is to have an orderquantity of a single unit?
Rafiki Bar uses 10,000 cases of millet beer monthly. One case costs Shs.5,000. Holding cost is 30% of the cost of a case p.a while ordering cost is Shs.100,000 per order. The firm works 360 days in a year while lead time is 6 days. Required: ii. Determine the days between orders and the reorder point iii. Determine the total cost of the inventory policy iv. Suppose actual holding cost turns out to be 15% instead of 30% and the inventory policy above is implemented for a year, determine the cost of prediction error if every other parameter estimate turns out as predicted.
Saga ltd. produces electronic toys for children between the ages of 7-10 years old. The toys use a processor that is imported from Japan. Annual demand for the processor is 12,500. The holding cost per processor per year is $2. Ordering cost per order is $400. Lead time is 7 days and the number of working days in the year is 250. a. What is the economic order quantity? b. What is the optimal number of orders per year? c. Calculate the annual holding cost if the economic order quantity is used. d. What is the optimal number of days between any two orders? e. What is the reorder point? f. Given the EOQ, what is the total annual inventory cost?