Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.

Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.

Name: Basic EOQ ModelItem X is a standard item stocked in a company's inven
Uploaded: 2024-03-20T06:57:05.000Z
Channel: Bartleby
Description: Basic EOQ ModelItem X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost ofcapital, amount to 18 pe

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

See similar textbooks

Similar questions

The sales of Whole Care mouthwash at Tom's of Maine over the past six months have averaged 2,000 cases per month, which is the current order quantity. Tom's of Maine's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions a) What is EOQ? b) What is the cost reduction? c) What is the reorder point? d) What is Time between Orders (TBO)?
A company has the option of purchasing a good ormanufacturing the item. If the item is purchased, thecompany will be charged $25 per unit plus a cost of $4 perorder. If the company manufactures the item, it has aproduction capacity of 8,000 units per year. It costs $50 toset up a production run, and annual demand is 3,000 unitsper year. If the annual holding cost is 10% and the cost ofmanufacturing one unit is $23, determine whether thecompany should purchase or manufacture the item.
Manufacture MTN has orders for about 100,000 units of its product for the entire year and has the capability of producing 500 units per day. MTN operates its facility 250 days per year. Setting up the production costs $50. The per unit cost of producing the component is $1. The holding cost is estimated to be $2 per unit per year.a) What is the optimal production order quantity for this product?b) What is the total annual cost MTN incurs using this optimal production order quantity?
Forrest and Dan make boxes of chocolates for which the demand is uncertain. Forrest says, “That’s life.” On the other hand, Dan believes that some demand patterns exist that could be useful for planning the purchase of sugar, chocolate, and shrimp. Forrest insists on placing a surprise chocolatecovered shrimp in some boxes so that “You never know what you’ll get.” Quarterly demand (in boxes of chocolates) for the last 3 years follows: Quarter Year 1 Year 2 Year 3 1 2 3 4 3,000 1,700 900 4,400 3,300 2,100 1,500 5,100 3,502 2,448 1,768 5,882 Total 10,000 12,000 13,600 a. Use intuition and judgment to estimate quarterly demand for the fourth year.b. If the expected sales for chocolates are 14,800 cases for year 4, use the multiplicative seasonal method to prepare a forecast for each quarter of the year. Are any of the quarterly forecasts different from what you thought you would get in part (a)?
Emery Pharmaceutical uses an unstable chemicalcompound that must be kept in an environment where both temperatureand humidity can be controlled. Emery uses 800 poundsper month of the chemical, estimates the holding cost to be 50%of the purchase price (because of spoilage), and estimates ordercosts to be $50 per order. The cost schedules of two suppliers areas follows: a) What is the economic order quantity for each supplier?b) What quantity should be ordered, and which supplier should be used?c) What is the total cost for the most economic order size?d) What factor(s) should be considered besides total cost?
Calculate the annual economic order quantity from the information provided below. INFORMATIONGM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of eachalarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost ofplacing an order for the alarm systems is estimated at R60.
ITEMS 14 and 15 ARE BASED ON THE FOLLOWING INFORMATION: The following information is available for Edgar Corporation's Material X Annual usage 12,600 units Working days per year 360 days Normal lead time 20 days The units of Material X are required evenly throughout the year. 14. What is the reorder point? a. 35 units c. 700 units b. 20th-day d. 630 units 15. Assuming that occasionally, the company experiences delay in the delivery of Material X, such that the lead time reaches a maximum of 30 days, how many units of safety stock should the company maintain and what is the reorder point? Safety Stock Reorder Point a. 350 1,050 b. 350 700 c. 0 1,050 d. 1,050…
1) What is the total demand of an enterprise with an economic order quantity of 1,500 units, a cost of 11.250 TL for each order, and 75 TL for one unit of inventory?a) 20,000b) 17,500c) 7,500d) 12,500f) 2,500 2) What is the total inventory cost of this business?a) 200,000b) 239,000c) 185,250d) 168,750e) 218,500
Please complete the sup part: e,f and g. 1.B&H needs to decide how to manage its inventory of cameras. The demand for cameras at B&H is 200 cameras per week. Each time that B&H places an order for a new shipment of cameras, it must pay $80 in fixed processing fees. A camera costs B&H $60 to purchase. The cost for B&H to hold a camera in its store for one week is $4. Assume that the lead time for the delivery of a camera is 0 weeks.a. Suppose that B&H places orders for cameras in quantities of 50 cameras at a time and places a new order for cameras each time that it runs out. Draw a graph showing the number of cameras that B&H has on-hand in inventory at each point in time up until the time when it places its fourth-order. Label the points in time at which B&H places a new order. Assume that B&H places its first order for 50 cameras on day 0.b. Suppose again that B&H places orders for 50 cameras at a time. What will be B&H’s average holding…
Happy Pet, Inc., is a large pet store located in LongBeach Mall. Although the store specializes in dogs, it a lso sellsfish, turtle, and bird supplies. The Everlast Leader, a leather leadfor dogs, costs Happy Pet $7 each. There is an annual demand for6,000 Everlast Leaders. The manager, Stephan Wagner, has determinedthat the ordering cost is $20 per order and the carrying cost,as a percentage of unit cost, is 15%. Happy Pet is now consideringa new supplier of Everlast Leaders. Each lead would cost only$6.65, but, in order to get this discount, Happy Pet would have tobuy shipments of 3,000 at a time. Should Happy Pet use the newsupplier and take this discount for quantity buying?
GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of eachalarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost ofplacing an order for the alarm systems is estimated at R60. Calculate the annual economic order quantity from the information provided below.
Native Customs sells two popular styles of hand-sewn footwear: a sandal and a moccasin. The cost to make a pair of sandals is $18, and the cost to make a pair of moccasins is $24. The demand for these two items is sensitive to the price, and historical data indicate that the monthly demands are given by S = 360 − 9P1 and M = 400 − 20P2, where S = demand for sandals (in pairs), M = demand for moccasins (in pairs), P1 = price for a pair of sandals, and P2 = price for a pair of moccasins. To remain competitive, Native Customs must limit the price (per pair) to no more than $60 and $75 for its sandals and moccasins, respectively. Formulate this nonlinear programming problem to find the optimal production quantities and prices for sandals and moccasins that maximize total monthly profit.