Answer on b) Sales price = 80 krPurchase price = 30 kr80 – 30 = 50 kr profit20 magazines * 80 kr = 1.6000 kr which will maximize the profit over time. Still dont get the answer on question c) 3. Inventory control subject to uncertain demanda. In situations with uncertain demand, we distinguish between two different typesof models, namely the (Q, R)-model and the Newsboy model. Explain shortlythe difference between these models and in which situations they should beused.b. A book and paper store distributes one specialized monthly magazine. Whenlooking at the sales the last years, they have concluded that each issue of themagazine will sell between 1 and 20 copies and the probability is equal for eachof these possibilities. The purchase price for the magazine is 30 kr. and thesales price is 80 kr. The store has an agreement with a second-hand store thatbuys unsold magazines for 10 kr. each. How many magazines should the storebuy of each issue to maximize the profit over time?c. The book and paper store also distributes a city guidebook that is ordered fromthe publisher when needed. The purchase cost is 60 kr., and the store mustassume a lead-time of three months from the order is placed and the guidebooksarrive. The store reckons an annual interest rate of 20 % to compute holdingcosts and estimates a cost of 40 kr. for a lost sale if the guidebook is requestedwhen they are out of stock. The expense of placing an order is set to 100 kr.The demand of the guidebook can vary a great deal, but the average during athree-month period has been calculated to 125. The demand can be describedby a normal distribution and the standard deviation is 15. Find the optimal valueof the lot size, Q, and the reorder point, R, in this case, and calculate the annualrelevant costs.

The reorder point is the level of inventory that triggers an action to replenish that particular…

c. The book and paper store also distributes a city guidebook that is ordered from the publisher when needed. The purchase cost is 60 kr., and the store must assume a lead-time of three months from the order is placed and the guidebooks arrive. The store reckons an annual interest rate of 20 % to compute holding costs and estimates a cost of 40 kr. for a lost sale if the guidebook is requested when they are out of stock. The expense of placing an order is set to 100 kr. The demand of the guidebook can vary a great deal, but the average during a three-month period has been calculated to 125. The demand can be described

c. The book and paper store also distributes a city guidebook that is ordered from the publisher when needed. The purchase cost is 60 kr., and the store must assume a lead-time of three months from the order is placed and the guidebooks arrive. The store reckons an annual interest rate of 20 % to compute holding costs and estimates a cost of 40 kr. for a lost sale if the guidebook is requested when they are out of stock. The expense of placing an order is set to 100 kr. The demand of the guidebook can vary a great deal, but the average during a three-month period has been calculated to 125. The demand can be described

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 14P

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Suppose that the EOQ is 100, average annual demand is1,000 units, and the lead time demand is a random variablehaving the distribution shown in Table 15.a What value of SLM1 corresponds to a reorder pointof 25?b If we wanted to attain a 95% value of SLM1, whatreorder point should we choose?c If we wanted an average of at most two stockouts peryear, what reorder point should we choose? Lead TimeDemand Probability10 16 15 14 20 14 25 112 30 14
Rick Jerz is attempting to perform an inventory analysison one of his most popular products. Annual demand for thisproduct is 5,000 units; ca rrying cost is $50 per unit per year; ordercosts for his company typically run nearly $30 per order; and leadtime averages I 0 days. (Assume 250 working days per year.)a) What is the economic order quantity?b) What is the average inventory?c) What is the optimal number of orders per year?d) What is the optimal number of working days between orders?e) What is the total annual inventory cost (carrying cost+ ordering cost)?t) What is the reorder poi nt?
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A hospital must order the drug Porapill from DaisyDrug Company. It costs $500 to place an order and $30 toreview the hospital’s inventory of the drug. Annual demandfor the drug is N(10,000, 640,000), and it costs $5 to holdone unit in inventory for one year. Orders arrive one monthafter being placed. Assume that all shortages are backlogged.a Estimate R and the number of orders per year thatshould be placed.b Using the answer in part (a), determine the optimal(R, S) inventory policy. Assume that the shortage costper unit of the drug is $100.
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In many respects, the food inventory decision for eachCelebrity cruise matches the single-period inventory modeldescribed in this chapter. Consider the decision about chicken.Suppose that Celebrity purchases chicken in bulk for $0.80 perpound, and any chicken left over after a cruise is donated tolocal food banks. Management estimates that a shortage penaltyof $1.00 per pound is incurred due to lost customer goodwillfrom unsatisfied demand. If chicken demand for a 7-daycruise is normally distributed with a mean of 3,000 pounds anda standard deviation of 200 pounds, how many pounds shouldbe brought onto the ship?
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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?
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