1. A manufacturing facility orders high-strength bolts from an outside supplier. The demand for bolts is high, since they are used in a variety of end products manufactured at the facility. Estimated demand (in thousands) over the next 10 weeks is: Week 2 3 4 5 7 8 10 Demand 22 34 32 12 8 44 54 16 76 30 The bolts cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint: Express h as the holding cost per thousand units.) a. What ordering policy is recommended by the Silver-Meal heuristic? b. What ordering policy is recommended by the part period balancing heuristic? c. What ordering policy is recommended by the least unit cost heuristic? d. Which method resulted in the lowest-cost policy for this problem?
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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.A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)d. Which method resulted in the lowest-cost policy for this problem?A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)a. What ordering policy is recommended by the Silver–Meal heuristic?
- A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)c. What ordering policy is recommended by the least unit cost heuristic?A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)b. What ordering policy is recommended by the part period balancing heuristic?3. Cynthia Knott’s oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $12 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $1 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 100 pounds and a standard deviation of 15 pounds. a) What is the cost of underestimating demand for each pound? b) What is the overage cost per pound? c) How many pounds of oyster should she order each day? d) What is the stockout risk for this order size?
- A hospital orders its thermometers from a hospitalsupply firm. The cost per thermometer depends on the ordersize q, as shown in Table 6. The annual holding cost is 25%of the purchasing cost. Let EOQ80 be the EOQ if the costper thermometer is 80¢, and let EOQ79 be the EOQ if thecost per thermometer is 79¢.a Explain why EOQ79 will be larger than EOQ80. b Explain why the optimal order quantity must be ei-ther EOQ79, EOQ80, or 100. c If EOQ80 100, show that the optimal order quan-tity must be EOQ79. d If EOQ80 100 and EOQ79 100, show that theoptimal order quantity must be either EOQ80 or 100.e If EOQ80 100 and EOQ79 100, show that the optimal order quantity must be EOQ79.The lead time demand for bathing suits is governed bythe discrete random variable shown in Table 11. Thecompany sells an average of 10,400 suits per year. The costof placing an order for bathing suits is $30, and the cost ofholding one bathing suit in inventory for a year is $3. Thestockout cost is $3 per bathing suit. Use marginal analysisto determine the optimal order quantity and the reorderpoint.Lead TimeDemand Probability180 .30190 .30200 .15210 .10220 .15The home appliance department of a large department store is using inventory models to controlthe replenishment of a particular model of Microwave ovens. The daily demand follows anormal distribution with a mean of 150 units and standard deviation of 16 units. The store pays$100 for each oven. Fixed costs of replenishment are $28. The accounting departmentrecommends a 20% annual holding cost rate. Assume that the average lead time is 5 days with astandard deviation of 1 day. Assume 365 days a year.Part A: What is the EOQ?Part B: What is the reorder point if the maximum chance of 5% of stock out (i.e. 95% servicelevel) is desired?Part C: What is the reorder point if a fill rate of 99% is required?Part D: Suppose management wants to simplify the process by setting the reorder point to“1000” units. Based on this policy, what is the implied chance of stock out?
- A Mercedes dealer must pay $20,000 for each carpurchased. The annual holding cost is estimated to be 25%of the dollar value of inventory. The dealer sells an averageof 500 cars per year. He believes that demand is backloggedbut estimates that if he is short one car for one year he willlose $20,000 worth of future profits. Each time the dealerplaces an order for cars, ordering cost amounts to $10,000.Determine the Mercedes dealer’s optimal ordering policy.What is the maximum shortage that will occur?A wholesaler has a steady demand for 50 items of a given product each month.The purchase cost of each item is 6 MU and the holding cost for this item is estimated tobe 20% of the stock value per annum. Every order placed by the wholesaler cost 10 MUin administration charges regardless of the number ordered? Please mention formulas and do it in detail so I can understand.I Carry rents trucks for moving and hauling. Each truck costs the company anaverage of $8,000, and the inventory of trucks varies monthly depending on thenumber that are rented out. During the first eight months of last year, I Carry hadthe following ending inventory of trucks on hand:Month Number of Trucks Month Number of TrucksJanuary 26 May 13February 38 June 9March 31 July 16April 22 August 5I Carry uses a 20 percent annual interest rate to represent the cost of capital.Yearly costs of storage amount to 3 percent of the value of each truck, and the costof liability insurance is 2 percent.a. Determine the total handling cost incurred by I Carry during the period Januaryto August. Assume for the purposes of your calculation that the holding costincurred in a month is proportional to the inventory on hand at the end of themonth.b. Assuming that these eight months are representative, estimate the average annual cost of holding trucks