Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier,TeddySports. Unfortunately, at the time of the order placement, demand is still uncertain: Teddy Bower forecasts that itsdemand is normally distributed with a mean of 1800 and a standard deviation of 1000. Teddy Bower sells these parkas at $22each. Unsold parkas have little salvage value; Teddy Bower simply gives them away to a charity (and also doesn't collect a taxbenefit for the donation). How many parkas should Teddy Bower buy from TeddySports to maximize expected profit? (please usethe normal distribution table and round up to the nearest integer).

Cu/(Co+Cu) is divided to provide a Z value, the Critical Ratio. The formula to calculate the…

Answered: Teddy Bower is an outdoor clothing and…

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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Annual demand for number 2 pencils at the campus store is normallydistributed with mean 1,000 and standard deviation 250. The store purchases the pencils for 6 cents each and sells them for 20 cents each. There is a two-month lead time from the initiation to the receipt of an order. The store accountant estimates that the cost in employee time for performing the necessary paperwork to initiate and receive an order is $20, and recommends a 22 percent annual interest rate for determining holding cost. The cost of a stock-out is the cost of lost profit plus an additional 20 cents per pencil, which represents the cost of loss of goodwill.a. Find the optimal value of the reorder point R assuming that the lot size used is the EOQ.b. Find the simultaneous optimal values of Q and R.c. Compare the average annual holding, setup, and stock-out costs of the policies determined in parts (a) and (b).d. What is the safety stock for this item at the optimal solution?
The Fast Service Food Mart stocks frozen pizzas in a refrigerated display case. The average daily demand for the pizzas is normally distributed, with a mean of 8 pizzas and a standard deviation of 2.5 pizzas. A vendor for a packaged food distributor checks the market’s inventory of frozen foods every 10 days, and during a particular visit, there were no pizzas in stock. The lead time to receive an order is 3 days. Determine the order size for this order period that will result in a 99% service level. During the vendor’s following visit, there were 5 frozen pizzas in stock. What is the order size for the next order period?
Chris usually sells 120 copies of newspaper each day and believe that sale are normally distributed, with a standard deviation of 15 papers. He pays 70 cents for each paper, which sells $1.25. For each unsold paper, he receives 30-cent credit. a) determine how many papers he should order each day b) calculate the stockout risk for that quantity.
The bookstore at Tech purchases jackets emblazoned withthe school name and logo from a vendor. The vendor sellsthe jackets to the store for $38 apiece. The cost to the bookstore for placing an order is $120, and the annual car-rying cost is 25% of the cost of a jacket. The bookstore manager estimates that 1700 jackets will be sold during theyear. The vendor has offered the bookstore the followingvolume discount schedule: Order Size Discount1–299 0%300–499 2%500–799 4%800 5% What is the bookstore’s optimal order quantity, given thisquantity discount information?
Please do not give solution in image format thanku Deltic sells this component for 55 per unit with a 4-month delivery lead time. Assume Deltic covers all transportation and related processing until delivery. TCX’s demand forecast for the upcoming selling season (12 months) is a normal distribution with mean 13500 and standard deviation 3736,4 . TCX sells each unit, after integrating their proprietary software, for 135. Assume that TCX uses a holding cost rate of 25 %, and any leftover units can be sold for 30 on average. Due to the long lead time and high minimum order quantity required, TCX is planning on a single order from Deltic to meet their needs in the next year. How many of these components should TCX order? Calculate the resulting expected annual profits for TCX.
Sampaguita Company makes corsages that it sells through salespeople on the streets. Each sells for P2 and has variable production costs of P0.80. The salespeople receive a P0.50 commission on each corsage they sell, and the company must spend P0.05 to get rid of each unsold corsage. The corsages last for only one week and cannot be carried in inventory.The manager of the firm had estimated demand per week and associated probabilities as follows:Demand Probability100,000 0.20120,000 0.20140,000 0.30160,000 0.30 The optimal weekly production of the corsage is? Please show solution.
The purchasing manager for the Atlantic Steel Company must determine a policy for orderingcoal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate,and the firm operates 360 days per year. The purchasing manager has determined that the orderingcost is $80 per order and the cost of holding coal is 20% of the average dollar value of inventoryheld. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton forthe coming year. If 5 days of lead time are required to receive an order of coal, how much coal should be on hand when an order is placed?
ou are a newsvendor selling the San Pedro Times every morning. Before you get to work, you go to the printer and buy the day’s paper for $0.50 a copy. You sell a copy of the San Pedro Times for $1.25. Daily demand is distributed normally with mean = 335 and standard deviation = 67. At the end of each morning, any leftover copies are worthless and they go to a recycle bin. How many copies of the San Pedro Times should you buy each morning and what is the probability that you will run out of stock? Use Excel's NORM.S.INV() function to find the z value.
A company is planning to purchase 10,000 units of a particular item in the year ahead. The item is purchased in boxes each containing 10 units of the item, at a price of €400 per box. The cost of holding an item in inventory for a year (including insurance, interest and space costs) is 10% of the purchase price. The cost of placing and receiving orders is to be estimated from cost data collected relating to similar orders, where costs of €7,000 were incurred on 25 orders. It should be assumed that ordering costs change in proportion to the number of orders placed. 5% should be added to the above ordering costs to allow for inflation. Assume that usage of the item will be even over the year. Required: (a) Calculate the economic order quantity (EOQ) in boxes which minimises total costs (b) Outline when and why it is appropriate to use economic batch quantity (EBQ)
An automotive warehouse stocks a variety of parts that are sold at neighborhood stores. One particular part, a popular brand of oil filter, is purchased by the warehouse for $1.50 each. It is estimated that the cost of order processing and receipt is $100 per order. The company uses an inventory carrying charge based on a 25 percent annual interest rate. The monthly demand for the filter follows a normal distribution with mean 290 and standard deviation 75. Order lead time is assumed to be five months. Assume that if a filter is demanded when the warehouse is out of stock, then the demand is back-ordered, and the cost assessed for each back-ordered demand is $12.80. With Type 2 Service objective of 95 percent. Find the optimal values of (Q, R). Q= R=
Annual demand for number 2 pencils at the campus store is normally distributed with mean 1,000 and standard deviation 250. The store purchases the pencils for 6 cents each and sells them for 20 cents each. There is a two-month lead time from the initiation to the receipt of an order. The store accountant estimates that the cost in employee time for performing the necessary paperwork to initiate and receive an order is $20, and recommends a 22 percent annual interest rate for determining holding cost. The cost of a stock-out is the cost of lost profit plus an additional 20 cents per pencil, which represents the cost of loss of goodwill. Consider the problem of satisfying the demand for number 2 pencils faced by the campus store mentioned above.a. Re-solve the problem, substituting a Type 1 service level criterion of 95 percent for the stock-out cost.b. Re-solve the problem, substituting a Type 2 service level criterion of 95 percent for the stock-out cost. Assume that Q is given by the…
A retailer carries 10,000 items in its store. During the week, there is some demand for 6000 of the items. Among those, there are 100 products for which all of the demand was not satisfied and 400 products for which only some of demand was satisfied. a. What is their in-stock probability for this week?b. What is their stockout probability for this week?

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