Garden Variety Flower Shop uses 670 clay pots a month. The pots are purchased at $2.40 each. Annual carrying costs per pot are estimated to be 10 percent of cost, and ordering costs are $10 per order. The manager has been using an order size of 2,000 flower pots. a.What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearest whole number. Round all other intermediate calculations and your final answer to 2 decimal places.) Additional annual cost b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 2,000)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent.) About % of the stora

Garden Variety Flower Shop uses 670 clay pots a month. The pots are purchased at $2.40 each. Annual carrying costs per pot are estimated to be 10 percent of cost, and ordering costs are $10 per order. The manager has been using an order size of 2,000 flower pots. a.What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearest whole number. Round all other intermediate calculations and your final answer to 2 decimal places.) Additional annual cost b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 2,000)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent.) About % of the stora

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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A mail-order house uses 17,460 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies. Number of Boxes Price per Box 1,000 to 1,999 $1.25 2,000 to 4,999 1.20 5,000 to 9,999 1.15 10,000 or more 1.10 a. Determine the optimal order quantity. (Round your answer to the nearest whole number.) Optimal order quantity __________ boxes b. Determine the number of orders per year. (Round your answer to 2 decimal places.) Number of order _____________ per year
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.
A local distributor for Hankook tires Company expects to sell 12,600 R14 radial tires nest year. The estimated cost of keeping a R14 tire per annum is ȼ126 and ordering cost is ȼ70. a) What is the optimal order quantity? b) How many times per year does the distributor order R14 tires? c) What is the length of an order cycle, if the company does not operate on Saturdays and Sundays? d) What is the annual total cost if the optimal quantity is ordered?
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?
Please do not give solution in image format thanku A mail-order house uses 16,820 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies. Number of Boxes Price per Box 1,000 to 1,999 $1.25 2,000 to 4,999 1.20 5,000 to 9,999 1.15 10,000 or more 1.10 a. Determine the optimal order quantity. (Round your answer to the nearest whole number.) Optimal order quantity boxes b. Determine the number of orders per year.
The TransCanada Lumber Company and Mill processes10,000 logs annually, operating 250 days per year. Immediately upon receiving an order, the logging company’ssupplier begins delivery to the lumber mill at the rate of 60logs per day. The lumber mill has determined that the ordering cost is $1600 per order, and the cost of carrying logsin inventory before they are processed is $15 per log on anannual basis. Determine the following:a. The optimal order sizeb. The total inventory cost associated with the optimalorder quantityc. The number of operating days between ordersd. The number of operating days required to receive anorde
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?
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?
The Olde Town Microbrewery makes Townside beer,which it bottles and sells in its adjoining restaurant and bythe case. It costs $1700 to set up, brew, and bottle a batchof the beer. The annual cost to store the beer in inventory is$1.25 per bottle. The annual demand for the beer is 21,000bottles and the brewery has the capacity to produce 30,000bottles annually.a. Determine the optimal order quantity, total annual inventory cost, the number of production runs per year, andthe maximum inventory level.b. If the microbrewery has only enough storage space tohold a maximum of 2500 bottles of beer in inventory,how will that affect total inventory costs?
Hayes electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters as follows: (a) both ordering cost and carrying cost are 10% less that originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.
It takes approximately 2 weeks (14 days) for an order ofsteel bolts to arrive once the order has been placed. The demandfor bolts is fa irly constant; on the average, the manager, MichelleWu, has observed that the hardware store sells 500 of these boltseach day. Because the demand is fairly constant, Michelle believesthat she can avoid stockouts completely if she orders the bolts atthe correct time. What is the reorder poin t?
Garden Variety Flower Shop uses 870 clay pots a month. The pots are purchased at $3.60 each. Annual carrying costs per pot are estimated to be 40 percent of cost, and ordering costs are $25 per order. The manager has been using an order size of 1,250 flower pots. a.What additional annual cost is the shop incurring by staying with this order size? (Round your optimal order quantity to the nearest whole number. Round all other intermediate calculations and your final answer to 2 decimal places. Omit the "$" sign in your response.) Additional annual cost$_____? b.Other than cost savings, what benefit would using the optimal order quantity yield (relative to the order size of 1,250)? (Use the rounded order quantity from Part a. Round your final answer to the nearest whole percent. Omit the "%" sign in your response.) About ____% of the storage space would be needed.