Ram Roy's firm has developed the following supply, demand, cost, and inventory data. Supply Available Demand Regular Time Period Overtime Subcontract Forecast 1 40 15 5 40 2 35 15 5 60 3 30 15 45 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit Carrying cost per unit per month 20 units $100 $150 $250 $4 Assume that the initial inventory has no holding cost in the first period and backorders are not permitted. Allocating production capacity to meet demand at a minimum cost using the transportation method, the total cost is $ (enter your response as a whole number).
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- Explain what is the definition of a deterministic inventory model ? When is it appropriate to use ?A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory policy for its 1-irons, which have the following characteristics:Demand 1D2 = 2,000 units/yearDemand is normally distributedStandard deviation of weekly demand = 3 unitsOrdering cost = $40/orderAnnual holding cost 1H2 = $5/unitsDesired cycle@service level = 90 percentLead time 1L2 = 4 weeksa. If the company uses a periodic review system, what should P and T be? Round P to the nearest week.b. If the company uses a continuous review system, what should R be?The following particulars were collected for the year 2015 from Need LLCMonthly demand -2,000 unitsCost of placing an order RO 225.Annual carrying cost per unit 8%Purchase price of input unit RO 350Minimum usage 30 units per weekMaximum usage 50 units per weekRe-order period 6 to 8 weeks.For emergency purchase 4 weeks Required:(a) Re-order quantity(b) Re-order level(c) Minimum level(d) Maximum level(e) Average Stock Level(f) Danger level
- A distributor of large appliances needs to determine the order quantities and reorderpoints for the various products it carries. The following data refer to a specii c refrigeratorin its product line:Cost to place an orderHolding costCost of refrigeratorAnnual demandStandard deviation of demand during lead timeLead time$10020 percent of product cost per year$500 each500 refrigerators10 refrigerators7 daysConsider an even daily demand and a 365-day year.a. What is the economic order quantity?b. If the distributor wants a 97 percent service probability, what reorder point, R, shouldbe used?Which of the following statements are true or false? 1.1 One of the objectives of purchasing and supply chain management is to maintain an optimum balance of inventory that would ensure the desired level of customer service while increasing costs. 1.2 Supply management has a major impact on the net income of the firm because it increases input costs and reduces sales revenue 1.3 The purchasing and supply function of a firm operates independently from the other enterprise functions. 1.4 Supply Management is the process of planning, organising, coordinating and controlling all the resources of the firm effectively and efficiently in order to attain the objectives of the firm as determined by management. 1.5 Strategic plans formulated at top management of purchasing and supply management are implemented or executed at top level management 1.6 In decentralized purchasing structures negotiating power is increased and volume discounts are made possible. 1.7 Steps of the strategic…Your company makes hand sanitizer in two lines: Moisturizing+, and StandardSoap. On the market, Moisturizing+ retails for $175/L and StandardSoap retails for $95/L. You make the hand sanitizer by combining lotion, soap, and secret ingredient SpecialX. These ingredients are purchased from a mysterious supplier, and you can purchase at most 4000L of lotion, 5000L of soap, and 750L of SpecialX in a month. Lotion costs $25/L, soap costs $10/L, and SpecialX costs $35/L. To make 1L of Moisturizing+, you need to combine 0.5L of lotion, 0.3L of soap, and 0.2L of SpecialX. To make 1L of StandardSoap, you need to combine 0.4L of lotion, 0.55L of soap, and 0.05L of SpecialX. Your company has committed to donating 500L of StandardSoap to a local charity. Since this is a donation, you will not receive any revenue. However, the costs and purchasing limits apply to both the hand sanitizer that is sold on the market and donated to charity. You want to maximize your monthly profit. Assume that…
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- AAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3 e. Which alternative should be chosen based on the minimax regret criterion? f. Which alternative should be chosen using the expected monetary value (EMV) criterion? g. What is the expected value under perfect information (EVPI)? Show WorkAAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3.a. Which alternative should be chosen based on the maximax criterion?b. Which alternative should be chosen based on the maximin criterion?c. Which alternative should be chosen based on the Lapalce criterion?d. Which alternative should be chosen based on criterion of realism with alpha = 0.7?e. Which alternative should be chosen based on the minimax regret criterion?f. Which…A firm is faced with the attractive situation in which it can obtain immediate delivery of an itemit stocks for retail sale. The firm has therefore not bothered to order the item in any systematicway. Recently, however, profits have been squeezed due to increasing competitive pressures, andthe firm has retained a management consultant to study its inventory management. The consultanthas determined that the various costs associated with making an order for the item stockedare approximately $30 per order. She has also determined that the costs of carrying the item ininventory amount to approximately $20 per unit per year (primarily direct storage costs and foregoneprofit on investment in inventory). Demand for the item is reasonably constant over time and the forecast is for 19,200 units per year. When an order is placed for the item, the entire orderis immediately delivered to the firm by the supplier. The firm operates 6 days a week plus afew Sundays, or approximately 320 days per…
