Problem 11-40 (Static) In the past, Taylor Industries has used a fixed-time perlod Inventory system that Involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor Involved in Inventory stockrooms, yet without Increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's Items. ITEM ANNUAL ITEM ANNUAL NUMBER USAGE NUMBER USAGE $ 1,500 $13,000 1 11 2 12,eee 2,200 50, eee 9,600 12 6ee 3 13 42,000 9,900 1, 20e 10, 200 4,000 61,e00 3,500 2,900 4 14 5 15 750 16 7 2,000 11,e00 17 18 see 19 10 15,e00 20 a. What would you recommend Taylor do to cut back Its labor cost? (Illustrate using an ABC plan.) Item Number Class 1 2 3 4 6 7 8. 10 11 12 13 14 15 16 17 18 19 20
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- Problem 20-40 (Algo) In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,600 11 $ 13,200 2 12,200 12 700 3 2,300 13 42,400 4 50,500 14 10,100 5 11,600 15 1,300 6 900 16 10,400 7 2,100 17 4,100 8 11,200 18 61,600 9 5,200 19 3,600 10 15,200 20 3,000 a. Classify each item in inventory using an ABC plan.Ram Roy's firm has developed the following supply, demand, cost, and inventory data. Supply Available Period Regular Time Overtime Subcontract Demand Forecast 1 30 15 5 40 2 30 15 5 45 3 30 20 5 50 Initial inventory 20 units Regular-time cost per unit $100 Overtime cost per unit $160 Subcontract cost per unit $200 Carrying cost per unit per month $4 Assume that the initial inventory has no holding cost in the first period and backorders are not permitted. Part 2 Allocating production capacity to meet demand at a minimum cost using the transportation method, the total cost is $enter your response here (enter your response as a whole number).Single-period. This type of problem can be recognized when a probability distribution or empirical Problem 8distribution for demand for a “perishable” item is given along with unit shortage and excess costs, orinformation that can be used to calculate them. Use these steps to solve the problem:1. Compute the optimal service level using Formula 13–17.2. If the given distribution is uniform or normal, use that to obtain the exact stocking level.3. If the distribution is Poisson or empirical, SL will fall between two cumulative frequencies.Round up to the higher frequency to find the optimal stocking level. Note: If the distribution isempirical, first obtain the cumulative frequencies or probabilities.A firm that installs cable TV systems uses a certain piece of equipment for which it carries two spareparts as optimal. The parts cost $500 each and have no salvage value or useful life after one period.Part failures can be modeled by a Poisson distribution with a mean of two failures during…
- A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .99. The order interval is 12 days, and lead time is 4 days. Average demand for one item is 63 units per day, and the standard deviation of demand is 6 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table. Use Table. Cycle On Hand 1 38 2 10 3 93 Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number) Cycle Units 1 1019 Numeric ResponseEdit Unavailable. 1019 incorrect. 2 1047 Numeric ResponseEdit Unavailable. 1047 incorrect. 3 964 Numeric ResponseEdit Unavailable. 964 incorrect.Consider that you work at Kroger Grocery store, and that you've been tasked with creating an ABC inventory classification for 6 items. The 6 items, as well as their profit per case and number of cases sold per week, are as follows:Ribeye Steak - $135 in profit per case, 3 cases sold per weekLobster Tail - $245 in profit per case, 3 cases sold per weekPasta - $23 in profit per case, 12 cases sold per weekSalt - $3 in profit per case, 2 cases sold per weekNapkins - $12 in profit per case, 2 cases sold per weekTomato Sauce - $23 in profit per case, 11 cases sold per weekUsing total weekly profits, please classify each products into A, B, or C categories. Which items form the boundary of the class A and B items in your classification, and why? Which items form the boundary of the class B and C items in your classification, and why?Average Inventory Calculation—Fixed–Order Quantity ModelSuppose the following item is being managed using a fixed–order quantity model with safety stock.Annual demand (D) = 1,000 unitsOrder quantity (Q) = 300 unitsSafety stock (SS) = 40 unitsWhat are the average inventory level and inventory turn for the item?
- Problem #2Cassorla’s Clothes sells a large number of white dress shirts. The shirts, which bear the store label,are shipped from a manufacturer in New York City. Hy Cassorla, the proprietor, says, “I want to besure that I never run out of dress shirts. I always try to keep at least a two months’ supply instock. When my inventory drops below that level, I order another two-month supply. I’ve beenusing that method for 20 years, and it works.”The shirts cost $6 each and sell for $15 each. The cost of processing an order and receiving newgoods amounts to $80, and it takes three weeks to receive a shipment. Monthly demand isapproximately normally distributed with mean 120 and standard deviation 32. Assume a 20percent annual interest rate for computing the holding cost.a) What value of Q and R is Hy Cassorla sing to control the inventory of white dress shirts?b) What fill rate (Type 2 service level) is being achieved with the current policy?c) Based on a 99 percent fill rate criterion,…Exercise 14: • __________is an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires producers to forecast demand accurately. • What is its main disadvantage?Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017. (in millions) 2015 2016 2017 Beginning inventory $ 2,100 $ 2,400 $ 2,300 Ending inventory 2,400 2,300 2,700 Cost of goods sold 18,227 20,071 20,478 Sales revenue 39,145 42,957 44,066 Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.) 2015 2016 2017 Days in inventory days
- d. The weekly average inventory listed above cannot change much since the grocery store is limited in storage capacity, and can therefore assumed to remain constant over time. The store has calculated that having less than 3 weeks of supply will create problems keeping stock available for clients. What annual cost of goods sold will bring about this condition (3 weeks of supply)?e. The grocery store is increasingly popular and management has calculated that, on average, the cost of goods sold increase by $5 million per year, reflecting better sales. How many years will it take for the grocery store to require expansion?Kris Lee, the owner and manager of the Quality Hardware Store, is reassessing his inventory policy for hammers. He sells an average of 50 hammers per month, so he has been placing an order to purchase 50 hammers from a wholesaler at a cost of $20 per hammer at the end of each month. However, Kris does all the ordering for the store himself and finds that this is taking a great deal of his time. He estimates that the value of his time spent in placing each order for hammers is $75. What would the unit holding cost for hammers need to be for Kris' current inventory policy to be optimal according to the basic EOQ model? What is this unit holding cost as a percentage of the unit acquisition cost? What is the optimal order quantity if the unit holding cost actually is 20 percent of the unit acquisition cost? What is the corresponding value of TVC? What is TVC for the current inventory policy? If the wholesaler typically delivers an order of hammers in 5 working days (out of 25 working…Metaverse LLP is a laptop manufacturing company located at Bengaluru, India. One of the main components of the laptop is the Hard Disk Drive (HDD). The inventory of this item is controlled by the EOQ model. Presently the company imports 40 GB HDD from Micron Components and Devices at a unit price of $60 and a 15 day delivery time. Metaverse needs to determine the amount to order each time an order is placed. They also need to determine when to place the order. The forecasted demand for the coming year for the 40GB HDD is 3,000 units. The company incurs a high ordering cost of $225 per order. The average annual inventory holding cost is estimated to be 25% of the item cost and a safety stock of 25 HDDs is maintained. The company operates for 300 days a year. However, Micron wants to drastically increase prices of HDDs which is not acceptable to Metaverse. The purchase officer of Metaverse has identified another supplier Minnesota Data Products. This supplier is willing to supply at…