save annually in ordering sud carryit 1. A manager receives a forecast tor text Ne aa. Demand is projected to be 600 units for the first half of the year and 900 units for the secund half. The mothly holding cost is $2 per unit, and it costs an estimated $55 to process an order. a. Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for each of the six-month periods. b. Why is it important to be able to assume that demand will be level during each six-month period? c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either period? If so, what order size would you recommend? 8. A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per jar, and reordering cost is $60 per order. The company operates an average of 20 days a month. a. What penalty is the company incurring by its present order size? han b. The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost. What ordering cost would enable the manager to justify ordering every other day (i.e., 10 times a month)? 9. The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 300 days a year. Find the following : The optimal run size APH 6 2 ी OPERATIONS MANAGEMENT Thirteenth Edition WILLIAM J. STEVENSON Mc Graw Hill Education $0E
save annually in ordering sud carryit 1. A manager receives a forecast tor text Ne aa. Demand is projected to be 600 units for the first half of the year and 900 units for the secund half. The mothly holding cost is $2 per unit, and it costs an estimated $55 to process an order. a. Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for each of the six-month periods. b. Why is it important to be able to assume that demand will be level during each six-month period? c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either period? If so, what order size would you recommend? 8. A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per jar, and reordering cost is $60 per order. The company operates an average of 20 days a month. a. What penalty is the company incurring by its present order size? han b. The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost. What ordering cost would enable the manager to justify ordering every other day (i.e., 10 times a month)? 9. The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 300 days a year. Find the following : The optimal run size APH 6 2 ी OPERATIONS MANAGEMENT Thirteenth Edition WILLIAM J. STEVENSON Mc Graw Hill Education $0E
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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I need help with question 13.8, chapter 13, question 8
Transcribed Image Text:save annually in ordering sud carryit
1. A manager receives a forecast tor text Ne aa. Demand is projected to be 600 units for the first half
of the year and 900 units for the secund half. The mothly holding cost is $2 per unit, and it costs
an estimated $55 to process an order.
a. Assuming that monthly demand will be level during each of the six-month periods covered by
the forecast (e.g., 100 per month for each of the first six months), determine an order size that
will minimize the sum of ordering and carrying costs for each of the six-month periods.
b. Why is it important to be able to assume that demand will be level during each six-month period?
c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50
units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either
period? If so, what order size would you recommend?
8. A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because
of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per
jar, and reordering cost is $60 per order. The company operates an average of 20 days a month.
a. What penalty is the company incurring by its present order size?
han
b. The manager would prefer ordering 10 times each month but would have to justify any change in
order size. One possibility is to simplify order processing to reduce the ordering cost. What ordering
cost would enable the manager to justify ordering every other day (i.e., 10 times a month)?
9. The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies
hot dogs to local restaurants at a steady rate of 250 per day. The cost to prepare the equipment for
producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates
300 days a year. Find the following :
The optimal run size
Transcribed Image Text:APH 6 2
ी
OPERATIONS
MANAGEMENT
Thirteenth Edition
WILLIAM J. STEVENSON
Mc
Graw
Hill
Education
$0E
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