Inventory Management Ch 12 12.40 Uriel A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (Fixed cost-$16 per order), beans are always shipped from Hawaii within exactly four days. Per-pound annual holding costs for the beans are $3. a) What is the EOQ for Kona Coffee Beans? b) What are the total annual hoding costs of stock for Kona coffee beans? c) What are the total annual ordering costs for Kona coffee beans? d) Assume the management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point be? e) What is the safety stock needed to attain a 1% risk of stockout during lead time? f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? g) If management specified that a 2% risk of stockout during lead time is acceptable, would the safety stock holding costs decrease or increase?

Inventory Management Ch 12 12.40 Uriel A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (Fixed cost-$16 per order), beans are always shipped from Hawaii within exactly four days. Per-pound annual holding costs for the beans are $3. a) What is the EOQ for Kona Coffee Beans? b) What are the total annual hoding costs of stock for Kona coffee beans? c) What are the total annual ordering costs for Kona coffee beans? d) Assume the management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point be? e) What is the safety stock needed to attain a 1% risk of stockout during lead time? f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? g) If management specified that a 2% risk of stockout during lead time is acceptable, would the safety stock holding costs decrease or increase?

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...

See similar textbooks

Similar questions

Inventory Management Ch 12 12.40 Uriel A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of kona coffee beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (Fixed cost-$16 per order), beans are always shipped from Hawaii within exactly four days. Per-pound annual holding costs for the beans are $3. e) What is the safety stock needed to attain a 1% risk of stockout during lead time? f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? g) If management specified that a 2% risk of stockout during lead time is acceptable, would the safety stock holding costs decrease or increase?
• Assume that ABC company is decided to sale every tire at $ 2 per unit. Forecasted demand of tire in next year is 9,600. Annual carrying cost is $16 per tire and ordering cost is $ 75. The distributor operates 288 days a year. i. What is the EOQ? ii. Hw many times per year does the store reorder? iii. What is the length of an order cycle? iv. What is the total annual cost if the EOQ quantity is ordered?
Problem 12-2 (Algo) A local distributor for a national tire company expects to sell approximately 9,780 tires of a certain size and tread design next year. Annual carrying cost is $18 per tire and ordering cost is $85. The distributor operates 283 days a year. a. What is the EOQ? (Round your answer to a whole number.) EOQ b. How many times per year does the store reorder? (Round your answer to two decimal points.) Number of Orders per Year c. What is the length of an order cycle? (Round your answer to two decimal points.) Length of Order Cycle d. What will the total annual carrying and ordering cost be if the EOQ quantity is ordered? (Round your answer to a whole number.) Total Annual Inventory Cost
Describe the difference between a fixed-quantity (Q) anda fixed-period (P) inventory system.
One reason for authorizing purchases is to enable efficient inventory manager. A) True B) False
EOQ for Production Lots ExerciseA Power Company buys coal from a Coal mine togenerate electricity in rural areas. The Coal minecan supply coal at the rate of 3,500 tons per day for$10.50 per ton. The Power Company uses the coalat a rate of 800 tons per day and operates 365 daysper year. The annual carrying cost for coal is 20%of the acquisition cost, and the ordering cost is$5,000.a) What is the economical production lot size?b) What is the Power Company’s maximuminventory level for coal?
Please do not give solution in image format thanku Carousel Restaurant in Coquitlam is using perpetual inventory control method. Determine the reorder quantity of chickpeas cans if the par stock is 25 cans, delivery takes 5 days, the daily usage is 2 cans and the desired safety factor is 1.5 a. 10 b. 20 c. 25 d. 15
ECUR UMIC ORDER QUANTITY CALCULATIONS (2 QUESTIONS) Company uses 800 units of a product per year on a continuous basis. The product year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the a safety stock of 5 days usage in inventory. has carrying costs of $50 A. Calculate the economic order quantity a. 98 B. Determine the reorder a. 150 days (3 CASH DISCOUNTS point. ONS) (Assume (EOQ). a 360-day year.) per unit per firm requires
explain what is ABC analysis fundamental premise what are the three factors that go into an ABC inventory analysis?
Given Information Service Level - 95% (z value= 1.6649) Order Cost - $125Order Cycle (weeks) - 4, 5, 6, 7, 8Lead Time (weeks) - 2 weeksOperating Time - 52 weeks Standard deviation = 69.3237 Variable Holding Cost - 12.019% Fixed Holding Cost - 1,659,317.307 QUESTION: Compute for annual variable holding cost. Formula Given: (EOQ/2) x (Unit cost x Percentage Value of Inventory)
A local distributor for a national tire company expects to sell approximately 9,600 steel-belted radial tires of a certain size and tread design next year. Annual carrying cost is $16 per tire, and ordering cost is $75. The distributor operates 288 days a year. What is the EOQ? а. b. How many times per year does the store reorder? What is the length of an order cycle? с. d. What is the total annual cost if the EOQ quantity is ordered?
Question 30 Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2,000 bags of fertilizer a year. Store A's annual holding costs are 30%. If Store A's order quantity is 20 cases, what is its average inventory level? Group of answer choices 10 40 25 20