IKEA purchases desks from a supplier in Germany. Their stores in the US sell 4,000 units of desks each month. Each unit costs $300, and the company has an annual holding cost of 20%. Placing a replenishment order incurs clerical costs of $500 per order. The shipping company charges $1,500 as a fixed cost per shipment. IKEA currently places a replenishment order every two months for 3,000 units. What is the annual ordering cost, annual holding cost, and annual total inventory cost under the current replenishment plan? Group of answer choices 32,000, 272,000, and 240,000 24,000, 264,000, and 240,000 24,000, 240,000, and 264,000 32,000, 240,000, and 272,000

IKEA purchases desks from a supplier in Germany. Their stores in the US sell 4,000 units of desks each month. Each unit costs $300, and the company has an annual holding cost of 20%. Placing a replenishment order incurs clerical costs of $500 per order. The shipping company charges $1,500 as a fixed cost per shipment. IKEA currently places a replenishment order every two months for 3,000 units. What is the annual ordering cost, annual holding cost, and annual total inventory cost under the current replenishment plan? Group of answer choices 32,000, 272,000, and 240,000 24,000, 264,000, and 240,000 24,000, 240,000, and 264,000 32,000, 240,000, and 272,000

Name: IKEA purchases desks from a supplier in Germany. Their stores in the U
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Description: IKEA purchases desks from a supplier in Germany. Their stores in the US sell 4,000 units of desks each month. Each unit costs $300, and the company has an annual holding cost of 20%. Placing a replenishment order incurs clerical costs of $500 per ord

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
Flanger is an industrial distributor that sources from hundreds of suppliers. The two modes of transportation available for inbound shipping are LTL (less than truck- load) and TL (truckload). LTL shipping costs $1 per unit, whereas TL shipping costs $500 per truck. Each truck can carry up to 1,000 units. Flanger wants a rule assigning products to shipping mode (TL or LTL) based on annual demand. Each unit costs $50, and Flanger uses a holding cost of 22 percent. Flanger incurs a fixed cost of $150 for each order placed with a supplier. a. Determine a threshold for annual demand above which TL is preferred and below which LTL is preferred. b. How does the threshold change [relative to part (a)] if unit cost is $150 (instead of $50 ) with all other data unchanged? Which mode becomes preferable as unit cost grows? c. How does the threshold change [relative to part (a)] if the LTL cost comes down to $0.8 per unit (instead of $1 per unit)?
A tire store orders its stock for a popular winter tire once every year. The cost of a tire for the store is $120. The store sells a tire for $140 at the regular price. The regular demand per year is 1,000 tires, which is normally distributed with a standard deviation of 70 tires. Customers do not prefer to buy from an older stock; hence the store does not keep the tires for the next year. The store is able to sell the excess stock at a reduced price of $80 per tire. How many tires the store should order each year?
ABC firm uses roughly 3,400 pounds of chemical dye a year. Currently, the firm purchases 300 pounds per order and pays P120.00 per pound. The supplier has just announced that orders of 1,000 pounds or more will be filled at a price of P80.00 per pound. The manufacturing firm incurs a cost of P4,000.00 each time it submits an order and assigns an annual holding cost of 17% of the purchase price per pound. a. Determine the order size that will minimize the total cost.b. If the supplier offered the discount at 1,500 pounds instead of 1,000 pounds, what order size would minimize total cost?
Rocky Mountain Tire Center sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year.The purchase price is $20 per tire if fewer than 500 tires are ordered, $18 per tire if 500 or more-but fewer than 1,000- tires a re ordered, and $17 per tire if I ,000 or more tires areordered.a) How many tires should Rocky Mountain order each time it places an order?b) What is the total cost of this policy?
The "Footcandy" shoes store supplies men's black formal shoes. Every 3 months the "Footcandy" shoes store can sell approximately 500 pairs of shoes at a constant price. The store is currently ordering 500 everytime they order. It costs $ 30 to place the order. 20% is the annual rate for the storage fee. With an order of 500 pairs of shoes, the store got the lowest price at $ 28 per pair. The order quantity discounts offered by the manufacturer are as follows Quantity Price 1 0-99 $36 2 100-199 $32 3 200-299 $30 4 300 $28 a. What is the minimum cost order amount for the shoes? b. What is the annual savings from Footcandy Store?
One of the products stocked at Weiss’s paint store, mentioned in Problem 14, is a certain type of highly volatile paint thinner that, due to chemical changes in the product,has a shelf life of exactly one year. Al Weiss purchases the paint thinner for $20 a galloncan and sells it for $50 a can. The supplier buys back cans not sold during the yearfor $8 for reprocessing. The demand for this thinner generally varies from 20 to 70cans a year. Al assumes a holding cost for unsold cans at a 30 percent annual interestrate.a. Assuming that all values of the demand from 20 to 70 are equally likely, what is theoptimal number of cans of paint thinner for Al to buy each year?b. More accurate analysis of the demand shows that a normal distribution gives abetter fit of the data. The distribution mean is identical to that used in part (a), andthe standard deviation estimator turns out to be 7. What policy do you nowobtain?
The Petoskey Potato Chip Company produces 3 varieties of gourmet potato chip. The varieties and average daily demand are given below: Bar-B-Que: 325 cases/day Sour Cream & Onion: 215 cases/day Classic Cut: 360 ases/day The company runs 24 hours/day and can produce 1,300 cases of potato chips per day. Each case of potato chip costs $20 to produce and Petoskey assumes 18% of this cost as the annual holding cost. It takes Petoskey 5 hours to setup for production of a different variety at a cost of $715. Calculate the minimum cost cycle time in days. Answer: 25.2 How is this calculated?
An optometrist orders eyeglass frames at a cost of $40per frame and sells each frame for $70. Annual holding costis 20% of the optometrist’s cost of purchasing a frame. Eachtime frames are ordered, a cost of $200 is incurred. Becauseof lost goodwill, a cost of $50 is incurred each time acustomer wants a frame that is not in stock. Frames aredelivered one week after an order is placed. Annual demandfor frames is N(1,040, 15.73).a Assuming all shortages are backlogged, determinethe order quantity and reorder point. b Assuming all shortages result in lost sales, deter-mine the order quantity and reorder point. c To meet 95% of all orders from stock, what shouldbe the reorder point?d To have shortages occur during an average of twolead times per year, what should be the reorder point?
A company faces an annual demand for 80,000 silk shirts. The holding cost is $1.60 per shirt & year, & the cost of placing one order is $1,000. In which one shirt costs $20. Suppose that our supplier offers a 1% discount if we were to order at least 30,000 shirts. Assuming that the holding costs are 8% of the purchase price, should we take this offer?
A retired couple supplement their income by making fruit pies, which they sell to a local grocery store. During the month of September, they produce apple and grape pies. The apple pies are sold for 2.00 to the grocer, and the grape pies are sold for 4.00. The couple is able to sell all of the pies they produce owing to their high quality. They use fresh ingredients. Flour and sugar are purchased once each month. For the month of September, they have 2100 cups of sugar and 3000 cups of flour. Each apple pie requires 1 1/2 cups of sugar and 3 cups of flour, and each grape pie requires 2 cups of sugar and 3 cups of flour. a. determine the number of grape and the number of apple pies that will maximize revenues if the couple working together can make and apple pie in 6 minutes and a grape pie in 3 minutes.…
The catering manager of LaVista Hotel, Lisa Ferguson, is disturbed by the amount of silverware she is losing every week. Last Friday night, when her crew tried to set up for a banquet for 500 people, they did not have enough knives. She decides she needs to order some more silverware, but wants to take advantage of any quantity discounts her vendor will offer. ≻For a small order (2,000 pieces or less) her vendor quotes a price of $1.80/piece. ≻If she orders 2,001 to 5,000 pieces, the price drops to $1.60/piece. ≻5,001 to 10,000 pieces brings the price to $1.40/piece, and ≻10,001 and above reduces the price to $1.25/piece. Lisa's order costs are $205 per order, her annual holding costs are 5%, and the annual demand is 45,100 pieces. For the best option (the best option is the price level that results in an EOQ within the acceptable range): Part 2 a) What is the optimum ordering quantity? enter your response here units (round your response to the…