The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitanproduces magazines and paperbacks that require 1,215,000 pounds of paper per year. Thecost per order for the company is $1,200; the cost of holding 1 pound of paper in inventory is$0.08 per year. Determine The optimal time between orders

The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitanproduces magazines and paperbacks that require 1,215,000 pounds of paper per year. Thecost per order for the company is $1,200; the cost of holding 1 pound of paper in inventory is$0.08 per year. Determine The optimal time between orders

Name: The Metropolitan Book Company purchases paper from the Atlantic Paper
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Description: The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitanproduces magazines and paperbacks that require 1,215,000 pounds of paper per year. Thecost per order for the company is $1,200; the cost of holding 1 pound of

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitanproduces magazines and paperbacks that require 1,215,000 pounds of paper per year. Thecost per order for the company is $1,200; the cost of holding 1 pound of paper in inventory is$0.08 per year. Determine The optimal number of orders per year
Fush uses an average of 40 boxes of paper serviettes a day. The restaurant operates 260 days per year, storage and handling costs for the serviettes are $ 30 per year per box, and it costs approximately $60 to order and receive a shipment of serviettes. Except for rounding, are annual ordering costs and carrying costs always equal at the EOQ? The manager is currently using an order size of 200 boxes, but wants to make sure he is managing supplies "in a cost efficient manner". Would you recommend that the manager use the optimal order size instead of 200 boxes?
The Sofaworld Company purchases upholstery materialfrom Barrett Textiles. The company uses 45,000 yards of material per year to make sofas. The cost of ordering mate-rial from the textile company is $1,500 per order. It costs Sofaworld $0.70 per yard annually to hold a yard of mater-ial in inventory. Determine the optimal number of yards of material Sofaworld should order, the minimum total inven-tory cost, the optimal number of orders per year, and the optimal time between orders.
A travel agency has a branch in Tsim Sha Tsui. The number of leaflets distributed to customers at the branch is normally distributed with a mean of 60 copies and a standard deviation of 15 copies each day. The branch operates 300 days per year. The cost of each leaflet is $4 and the carrying cost of each leaflet is 20% per year. The leaflets are supplied by a print shop with a fixed set up cost of $250 per order placement. The delivery leadtime is 6 days. Find the optimal order quantity of leaflet and the minimized total cost of ordering and carrying. Determine the time (in month) between two consecutive orders. Determine the required safety stock and reorder point to achieve a 97% service level. (Round up to the nearest integer where reasonable and appropriate.)
A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffeehouse estimates that it costs $45 in paperwork and labor to place an order for the coffee, and holding costs are based on a 20 percent annual interest rate.a. Determine the optimal order quantity for Colombian coffee.b. What is the time between placement of orders?c. What is the average annual cost of holding and setup due to this item?d. If replenishment lead time is three weeks, determine the reorder level based on the on-hand inventory.
A company has estimated its economic order quantity for Part A at 3,000 units for the coming year. If ordering costs are P200 and carrying costs are P0.50 per unit per year, what is the estimated total annual usage?
Happy Pet, Inc., is a large pet store located in LongBeach Mall. Although the store specializes in dogs, it a lso sellsfish, turtle, and bird supplies. The Everlast Leader, a leather leadfor dogs, costs Happy Pet $7 each. There is an annual demand for6,000 Everlast Leaders. The manager, Stephan Wagner, has determinedthat the ordering cost is $20 per order and the carrying cost,as a percentage of unit cost, is 15%. Happy Pet is now consideringa new supplier of Everlast Leaders. Each lead would cost only$6.65, but, in order to get this discount, Happy Pet would have tobuy shipments of 3,000 at a time. Should Happy Pet use the newsupplier and take this discount for quantity buying?
The Melon Enterprise used to sell 175 bottles of 500ml vegetable cooking oil per month. The unit cost for a bottle of cooking oil is RM2.50 and the cost of placing an order has been estimated to be RM12.00. The store imposes an inventory carrying charge of 27% per year. The company have to wait 3 weeks’ time for the order to be delivered. Based on this information, calculate the following inventory decisions: (Hint:Provides the answers in two decimal points) a. Optimum order quantity, order frequency and annual total cost.The store restructures its inventory system by ordering using an automation purchasing process, the ordering cost can be by cut 65%.b. Determine the new optimal order quantity, order frequency and annual inventory cost. Explain the answer.
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the average total daily costs, including the cost of the pepperoni?
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a servicelevel of .98. The order interval is 14 days, and lead time is 2 days. Average demand for one itemis 40 units per day, and the standard deviation of demand is 3 units per day. Given the on-handinventory at the reorder time for each order cycle shown in the following table, determine theorder quantities for cycles 1, 2, and 3.Cycle On Hand1 422 83 103
BERNARDS COMPANY LTD is a PRODUCER of fruit juices. The company has an annual demand of 150,000 barrels. The barrels cost $30 each. Fresh supplies can be obtained immediately, but ordering cost and the cost of carriage inwards are $400 per order. The annual cost of holding one barrel in inventory is estimated to be $3.50. The economic order quantity has been calculated to be 10,500 barrels. The suppliers introduce a quantity discount of 5% on orders of at least 12,000 barrels and 5.5% on orders of at least 15,000 barrels. You are required to: Determine whether the least cost order quantity is still the EOQ of 10,500 barrels.