Malburn Construction Ltd. Manufactures and distributes window frames. The company uses 600,000 metal strips in producing the frames for the year. Each strip cost $15, the storage cost is 10% of the cost price and $180 is required to make an order. Suppose Malburn Construction has acquired the necessary capital investments such that the metal strip could be produce at its own factory at a rate of 800,000 metal strips per annum. Calculate: (i). the economic batch order quantity (ii). the number of runs per year. (iii). the length of the cycle in days (iv). the run time in days (v). the effective replenishment per year (vi). the peak inventory level (vii). the annual storage cost (viii).the annual ordering cost

Malburn Construction Ltd. Manufactures and distributes window frames. The company uses 600,000 metal strips in producing the frames for the year. Each strip cost $15, the storage cost is 10% of the cost price and $180 is required to make an order. Suppose Malburn Construction has acquired the necessary capital investments such that the metal strip could be produce at its own factory at a rate of 800,000 metal strips per annum. Calculate: (i). the economic batch order quantity (ii). the number of runs per year. (iii). the length of the cycle in days (iv). the run time in days (v). the effective replenishment per year (vi). the peak inventory level (vii). the annual storage cost (viii).the annual ordering cost

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

Consider a hardware supply warehouse that is contractually obligated to deliver 1000units a specialized fastener to a local manufaturing company each week. Each time thewarehouse places an order for these items from its supplier, an ordering and transporationfee off $20 is charged to the warehouse. The warehouse pays $1.00 for each fastener andcharges the local firm $5.00 for each fastener. Annual holding cosst iss 25% off inventoryvalue, or $0.25 per year. The warehouse manager would like to know how much to orderwhen inventory gets to zero.Assume that the warehouse works 50 weeks/year.
The Rahway, New Jersey, plant of Metalcase, a manufacturer of office furniture, produces metaldesks at a rate of 200 per month. Each desk requires 40 Phillips head metal screws purchasedfrom a supplier in North Carolina. The screws cost 3 cents each. Fixed delivery charges and costsof receiving and storing shipments of the screws amount to about $100 per shipment, independently of the size of the shipment. The firm uses a 25 percent interest rate to determineholding costs. Metalcase would like to establish a standing order with the supplier and is considering several alternatives. What standing order size should they use?
The president of Value Filters became very enthusiastic about using EOQs to plan the sizes of her production runs, and instituted lot sizing based on EOQ values before she could properly estimate costs. For one particular filter line, which had an annual demand of 1,800 units per year and which was valued at $2.40 per unit, she assumed a holding cost based on a 30 percent annual interest rate and a setup cost of $100. Some time later, after the cost accounting department had time to perform an analysis, it found that the appropriate value of the interest rate was closer to 20 percent and the setup cost was about $40. What was the additional average annual cost of holding and setup incurred from the use of the wrong costs?
A local company produces an erasable programmable read-only memory (EPROM) for severalindustrial clients. It has experienced a relatively flat demand of 2,500 units per year for theproduct. The EPROM is produced at a rate of 10,000 units per year. The accounting departmenthas estimated that it costs $50 to initiate a production run, each unit costs the company $2 tomanufacture, and the cost of holding is based on a 30 percent annual interest rate. Determinethe optimal size of a production run, the length of each production run, and the average annualcost of holding and setup. What is the maximum level of the on-hand inventory of the EPROMs?
HAL Ltd. produces a line of high-capacity disk drivers for mainframe computers. It canproduce the disk drive housings at the rate of 150 housings per month. The housing cost85$ each to produce and the setup cost for beginning of a production run is 700$. Assumethe annual interest rate of 28% for determining the holding cost and the demand is 720units per year.a) What is the optimal number of housing for HAL Ltd. to produce in each productionrun?b) Find the time between initiation of production runs, the time devoted to productionand the downtime each production cycle.c) Calculate the maximum level of inventory in the warehouse in this case.
Letherin Hides is a company that makes boots specifically targeting college students. Forecasts of sales for the next year are 200 in the summer, 450 in the fall, and 500 in the winter. Accessories that are used on the boots are purchased from a supplier for $31.66. The cost of capital is estimated to be 24% per year (or 6% per quarter); thus, the holding cost per item is 0.06(31.66)=$1.9 per quarter (rounded figure). Letherin Hides hires freelance art designers at part-time to craft designs during the summer, and they earn $6.00 per hour. In the fall, labor is more difficult to keep, and the owner must pay $6.50 per hour to retain qualified help. Because of the high demand for part-time help during the winter holiday season, labor rates are higher in the winter, and workers earn $7.75 per hour. Each boot design takes 2 hours to complete. How should production be planned over the three quarters to minimize the combined production and inventory holding costs? The table below provides…
Henrique Correa's bakery prepares all its cakesbetween 4 A.M. and 6 A.M. so they will be fresh when customersarrive. Day-old cakes are virtually always sold, but at a 50% discountofT the regular $ 10 price. The cost of baking a cake is $6, anddemand is estimated to be normally distributed, with a mean of25and a standard deviation of 4. What is the optimal stocking level?
A local supermarket sells a popular brand of shampoo at a fairly steady rate of 380 bottles per month. The cost of each bottle to the supermarket is 45 cents, and the cost ofplacing an order has been estimated at $8.50. Assume that holding costs are based ona 25 percent annual interest rate. Stock-outs of the shampoo are not allowed.a. Determine the optimal lot size the supermarket should order and the time betweenplacements of orders for this product.
Lia ITZY has determined that the annual demand for number 6 screws is 100,000 screws. Lia, who works in her brother’s hardware store, is in charge of purchasing. She estimates that it costs $10 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 cent. Assume that the demand is constant throughout the year. QUESTION: How many number 6 screws should Lia order at a time if she wishes to minimize total inventory cost?
Lia ITZY has determined that the annual demand for number 6 screws is 100,000 screws. Lia, who works in her brother’s hardware store, is in charge of purchasing. She estimates that it costs $10 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 cent. Assume that the demand is constant throughout the year. QUESTION: How many orders per year would be placed? What would the annual ordering cost be?
Cooler Corporation is a manufacturer of cooling products. It purchases 14,400 units of a particular component (CK55) each year at a cost of $60 per unit. Cooler Corporation requires a 12% annual rate of return on investment. In addition, relevant carrying costs for insurance, material-handling, and breakage are $0.40 per unit per quarter, whereas warehousing rental cost is $12,000 per month. Relevant costs per purchase order are $144.00. Purchasing manager’s salary is $80,000 per year. Required: Calculate Cooler’s EOQ for CK55. Calculate Cooler’s total ordering and carrying costs. Assume that demand is uniform throughout the year and is known with certainty. The purchasing time is half a month. Calculate the reorder point for CK55.
An electronics retailer sells laptops at a steady rate of 7,500 per quarter. It costs the manufacturer $350 tomake each laptop, and they charge $400/laptop to the retailer. The manufacturer produces the laptop at asteady rate that matches demand, and incurs a fixed cost of $2,800 to fulfill each retail order. Both theretailer and the manufacturer have an annual holding cost percentage of 20%. The retailer places 10orders with the laptop manufacturer each quarter (which it determined from an EOQ calculation). Whatare the retailer’s and manufacturer’s costs under this current setup, as well as the total supply chain cost?What quantity discount should the manufacturer offer the retailer in order to minimize the total supplychain costs? Under this quantity discount, what are the new retailer and manufacturer costs? Does theretailer choose to use the quantity discount? PLEASE SHOW ALL CALUCALTIONS/EXCEL MODEL