Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following: (a) Average inventory level (b) The number of orders placed per year (c) The total annual inventory holding cost (d) The total annual ordering cost (e) The total annual cost

Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following: (a) Average inventory level (b) The number of orders placed per year (c) The total annual inventory holding cost (d) The total annual ordering cost (e) The total annual cost

Name: Custom Computers, Inc. assembles custom home computer systems. The hea
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Description: Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the

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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The annual demand for a product is 15,200 units. The weekly demand is 292 units with a standard deviation of 80 units. The cost to place an order is $33.50, and the time from ordering to receipt is two weeks. The annual inventory carrying cost is $0.10 per unit. a. Find the reorder point necessary to provide a 90 percent service probability. (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Round "z" value to 2 decimal places.)\ b. Suppose the production manager is asked to reduce the safety stock of this item by 45 percent. If she does so, what will the new service probability be? (Use Excel's NORMSDIST() function to find the correct probability for your computed Z-value. Round "z" value to 2 decimal places and final answer to 1 decimal place.)
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?
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?
Your firm uses a continuous review system and operates 52 weeks per year. One of the Stock-Keeping Units (SKUs) has the following characteristics:Demand = 20000 units/year = 385 units/weekOrdering cost = $40/orderHolding cost = $2/unit/yearService level = 95 percentz=1.65Lead time = 2 weeksDemand is normally distributed, with a standard deviation of weekly demand of 100 units. a)Calculate the item's EOQ. b)Find the safety stock and reorder point that provide a 95 percent service level. c)For these policies, what are the annual costs of (i) holding the cycle inventory and (ii) placing orders?
Petromax Enterprises uses a continuous review inventorycontrol system for one of its SKUs. The following informationis available on the item. The firm operates 50 weeks in a year.Demand = 50,000 units>yearOrdering cost = $35>orderHolding cost = $2>unit>yearAverage lead time = 3 weeksStandard deviation of weekly demand = 125 unitsa. What is the economic order quantity for this item?b. If Petromax wants to provide a 90 percent cycle-servicelevel, what should be the safety stock and the reorder point?
William Beville's Computer Training School in Richmond stocks notebooks for sale and would like to reduce its inventory cost by determining the optimal number of notebooks to order in each order. The ordering cost for each order is $27. The annual demand is 19455 units. The annual cost of holding each unit is $6. Each notebook costs $12. The school has a year of 250 working days. When a new order of notebooks is made, the supplier takes 4 days to deliver it. Show your work. 1. What inventory management model should we use to solve this problem? Model Economic Quantity to Order Model for discount purchases Model Economic Quantity to Produce Model to handle dependent demand 2. What is the optimal number of notebooks to make in each order? Response 3. What is the annual ordering cost (AOC)? Response 4. What is the Annual Holding Cost (AHC)? Response 5. What is the annual product cost (APC)? Response 6. What is the annual total cost of managing inventory (ATC) Answer 7. What would be the…
Custom Computers, Inc. assembles custom home computersystems. Th e heat sinks needed are bought for $12 each and areordered in quantities of 1300 units. Annual demand is 5200 heatsinks, the annual inventory holding cost rate is $3 per unit, andthe cost to place an order is estimated to be $50. Calculate thefollowing:(a) Average inventory level(b) Th e number of orders placed per year(c) Th e total annual inventory holding cost(d) Th e total annual ordering cost(e) Th e total annual cost
Skinnerís Fish Market buys fresh Boston bluefish daily for $5.60 per pound and sells it for $9.80 per pound. At the end of each business day, any remaining bluefish is sold to a producer of cat food for $3.80 per pound. Daily demand can be approximated by a normal distribution with a mean of 105 pounds and a standard deviation of 24 pounds. 1. What inventory model should be used to determine the order quantity to maximize the total expected proÖt? Why? 2. What is the service level under the optimal order quantity? 3. How much fresh Boston blueÖsh should Skinnerís Fish Market order so as to maximize the total expected proÖt?
Edwarldo’s Manufacturing uses 2,400 units of a product per year on a continuous basis. The product Carrying Cost are $60 per year and Ordering Cost are $250. It takes 20 days to receive a shipment after an order is placed and the firm requires a safety stock of 8 days of usage in inventory. Show Computations and Explanations. A. Calculate the Economic Order Quantity (round up the answer to the nearest whole unit) (Format: 111) B. Calculate the Total Cost per year to order and carry this item. (Format: 1,111) C. Their supplier has notified the company that if they increase their order quantity by 58 units, they will give the company a discount. Calculate the Dollar Discount that the company will have to at least give to Edwarldo’s Manufacturing to be indifferent. (Format: 111)
Taylor Supply is a wholesaler of office supplies and equipment. Taylor purchases cartons of staples from Barker Manufacturing. Barker offers a price of $7 per carton of staples. Taylor incurs a fixed charge of $90 per order to cover order equipment and clerical costs. Each order takes 3 days to arrive. Taylor has projected sales to be 603 boxes per day. Taylor's accounting department has determined the holding costs relevant for inventory decisions are 28% of unit cost. Assume Q=3000. If Taylor wants a 90% service level, and the standard deviation in daily demand is 250, what is their average inventory?
The manager of a large electronics store wants to begin stocking a universal TV remote control device. Expected daily demand is 25 units (250 working days a year). The remote controls can be purchased from either supplier A or supplier B. Their price lists are as follows: Supplier A Supplier B Quantity Unit price Quantity Unit price 1-199 $14 1-149 $14.1 200-499 $13.8 150-349 $13.9 500+ $13.6 350+ $13.7 Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Lead time for either supplier is 10 days. Which supplier should be chosen and what kind of inventory ordering policy should be adopted?
Helen needs 1159 kgs of chicken per day on average to make enchiladas for her store. The supplier charges a $67 delivery fee per order (which is independent of the order size) and $3.90 per kg. Helen’s annual holding cost is 20%. Assume 52 weeks per year and 7 days per week. If Helen wants to minimize inventory holding and ordering costs, how much chicken should she purchase with each order (in kgs)? Provide your answer as an integer value.Use Econimic Order Quantity formula. The answer is 8,513. Not sure how to get there.