Each month, a gas station sells 4,000 gallons of gasoline.Each time the parent company refills the station’s tanks, itcharges the station $50 plus 70¢, per gallon. The annual costof holding a gallon of gasoline is 30¢.a How large should the station’s orders be?b How many orders per year will be placed?c How long will it be between orders? d Would the EOQ assumptions be satisfied in this sit-uation? Why or why not? e If the lead time is two weeks, what is the reorderpoint? If the lead time is ten weeks, what is the reorderpoint? Assume 1 week 512year.

Each month, a gas station sells 4,000 gallons of gasoline.Each time the parent company refills the station’s tanks, itcharges the station $50 plus 70¢, per gallon. The annual costof holding a gallon of gasoline is 30¢.a How large should the station’s orders be?b How many orders per year will be placed?c How long will it be between orders? d Would the EOQ assumptions be satisfied in this sit-uation? Why or why not? e If the lead time is two weeks, what is the reorderpoint? If the lead time is ten weeks, what is the reorderpoint? Assume 1 week 512year.

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Description: Each month, a gas station sells 4,000 gallons of gasoline.Each time the parent company refills the station’s tanks, itcharges the station $50 plus 70¢, per gallon. The annual costof holding a gallon of gasoline is 30¢.a How large should the station’s

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
At Dot Com, a large retailer of popular books, demand isconstant at 20,400 books per year. The cost of placing anorder to replenish stock is $35, and the annual cost of holdingis $6 per book. Stock is received 5 working days after an orderhas been placed. No backordering is allowed. Assume 250working days a year.a. What is Dot Com’s optimal order quantity?b. What is the optimal number of orders per year?c. What is the optimal interval (in working days) betweenorders?
Assume that Triksi Co. makes footballs and is trying to determine the quantity of leather it should order every time an order is placed. The relevant information is as follows: I. Over the course of a year 12,000 square meters of leather will be needed, II. The cost of storing 1 square meter of leather is $3, and III. The cost of placing an order is $450 Show Computations and Explanations. A. What is the EOQ? (Formula: 1,111)
The EOQ model isa) not very useful in practice since the assumptions areunrealisticb) finds the optimal safety stockc) is quite useful, due to the fact that the optimum is quite flatd) depending on the standard deviation of the demande) has an impact of the re-order-point
An online retailer sells 1,500 t-shirts per year. The cost of the t-shirts to the store is $3.00 and the cost of placing an order is $15 per order. It cost $0.60 per t-shirt per year for the retailer to hold the t-shirts. The retailer sells the t-shirts for $9.99. Determine (a) the optimal order quantity, (b) the order frequency (c) the annual holding and setup cost.
The Warren W. Fisher Computer Corporation purchases 8,000transistors each year as components in minicomputers. The unit cost of each transistor is $10, and the cost of carrying one tran-sistor in inventory for a year is $3. Ordering cost is $30 per order. What are (a) the optimal order quantity, (b) the expectednumber of orders placed each year, and (c) the expected timebetween orders? Assume that Fisher operates on a 200-dayworking year.
You have found the EOQ for a given item. The optimal time between replenishments (T*) is 9.3 weeks. Since you have to manage many different items, you are trying to minimize costs and coordinate your orders following the Power of Two Policy. Taking this into account, which of the following statements is true? Select all correct answers You should order this item every sixteen weeks. Changing the order frequency using this policy will increase the cost by no more than 6% of the optimal Total Relevant Cost. You should order this item every eight weeks. You should order this item every six weeks. You should order this item every four weeks. None of the above.
Problem 20-39 (Algo) CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price-break and other data for the problem: Price of copper $ 0.84 per pound up to 2,499 pounds $ 0.83 per pound for orders between 2,500 and 4,999 pounds $ 0.81 per pound for orders 5,000 pounds or greater Annual demand 54,000 pounds per year Holding cost 25 percent per unit per year of the price of the copper Ordering cost $ 30 Which quantity should be ordered? Quantity_____________pounds
Consider the coffeehouse discussed below. Suppose that its setup cost for ordering was really only $15. Determine the error made in calculating the annual cost of holding and setup incurred as a result of its using the wrong value of K. (Note that this implies that its current order policy is suboptimal.) A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffeehouse estimates that it costs $45 in paperwork and labor to place an order for the coffee, and holding costs are based on a 20 percent annual interest rate.
A department store uses a (Q, R) policy to control its inventories. Sales of a pocket FM radioaverage 1.4 radios per week. The radio costs the store $50.00, and fixed costs of replenishmentamount to $20.00. Holding costs are based on a 20 percent annual interest charge, and thestore manager estimates a $12.50 cost of lost profit and loss of goodwill if the radio is demanded when out of stock. Reorder lead time is 2 weeks, and statistical studies have shownthat demand over the lead time is accurately described by a Poisson distribution. Find the optimallot sizes and reorder points for this item.
Ardie Corporation uses 30,000 units. Each order placed is for 1,500 units. The stockout units is 300. Management is willing to accept a stockout probability of 40 percent. The stockout cost per unit is P3.20. What does the total stockout cost? choose the letter of the correct answera. P2,680.00b. P3,680.00c. P4,680.00d. P5,680.00e. P7,680.00
In the production quantity EOQ model, what would be theeffect of the production rate becoming increasingly largeas the demand rate became increasingly small, until theratio d/p was negligible?