Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annualrate of 7,400 copies. The cost of one copy of the book is $11.50. The holding cost is based on an 18% annual rate, and production setupcosts are $150 per setup. The equipment with which the book is produced has an annual production volume of 25,000 copies. Wilson has250 working days per year, and the lead time for a production' run is 15 days. Use the production lot size model to compute the followingvalues. (Round your answers to two decimal places.)(a) Minimum cost production lot size(b) Number of production runs per year(c) Cycle time(d) Length of a production run (in days)days(e) Maximum inventory(f) Total annual cost (in $)$(g) Reorder point

D = Annual demand S = Setup cost C = unit cost H = holding cost

Answered: Wilson Publishing Company produces…

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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Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7,400 copies. The cost of one copy of the book is $11.50. The holding cost is based on an 18% annual rate, and production setup costs are $150 per setup. The equipment with which the book is produced has an annual production volume of 25,000 copies. Wilson has 250 working days per year, and the lead time for a production run is 15 days. Use the production lot size model to compute the following values. (Round your answers to two decimal places.) (a)Minimum cost production lot size (b)Number of production runs per year (c)Cycle time (d)Length of a production run (in days) days (e)Maximum inventory (f)Total annual cost (in $) $ (g)Reorder point
Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and the annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: a. What is the EOQ for this component? b. What is the reorder point? c. What are the total annual holding and ordering costs associated with your recommended EOQ?
A Mercedes dealer pays $40,000 for each car purchased (wholesale price). The annual holding cost is estimated to be 30% of the dollar value of inventory. The dealer sells an average of 1200 cars per year. They believe that demand is backlogged but estimate that if they are short one car for one year, the loss in future profits is about 10% of the wholesale price. Each time the dealer places an order for cars, ordering costs amount to $1600. Assume there are 360 work days per year. Question: If the Mercedes dealer wants to limit backorders so that they occur 20% of the time, what is the maximum number of backorders that should be allowed (assuming the optimal order quantity doesn't change)?
Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7500 copies. The cost of one copy of the book is $14.50. The holding cost is based on an 20% annual rate, and production setup costs are $150 per setup. The equipment on which the book is produced has an annual production volume of 25,000 copies. Wilson has 250 working days per year, and the lead time for a production run is 15 days. Use the Economic Production Quantity model to compute the following values: Minimum cost production lot size Number of production runs per year Cycle time Length of a production run Maximum inventory Total annual cost Reorder point
Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 6,900 copies. The cost of one copy of the book is $12. The holding cost is based on an 19% annual rate, and production setup costs are $135 per setup. The equipment on which the book is produced has an annual production volume of 21,500 copies. Wilson has 250 working days per year, and the lead time for a production run is 17 days. Use the production lot size model to compute the following values:
A Mercedes dealer pays $40,000 for each car purchased (wholesale price). The annual holding cost is estimated to be 30% of the dollar value of inventory. The dealer sells an average of 1200 cars per year. They believe that demand is backlogged but estimate that if they are short one car for one year, the loss in future profits is about 10% of the wholesale price. Each time the dealer places an order for cars, ordering costs amount to $1600. Assume there are 360 work days per year. Question: What percent of the time do shortages occur? I've deduced the percent of shortage time to be 25%, but am not sure I've set up my formulas correctly.
The Shotz Brewery produces an ale, which it stores in bar-rels in its warehouse and supplies to its distributors on de-mand. The demand for ale is 1800 barrels per day. The brewery can produce 3000 barrels per day. It costs $7500to set up a production run for ale. Once it is brewed, the aleis stored in a refrigerated warehouse at an annual cost of$60 per barrel. Determine the economic order quantity andthe minimum total annual inventory cost.
Harvey’s Specialty Shop is a popular spot that specializes in international gourmet foods. Oneof the items that Harvey sells is a popular mustard that he purchases from an English company.The mustard costs Harvey $10 a jar and requires a six-month lead time for replenishment ofstock. Harvey uses a 20 percent annual interest rate to compute holding costs and estimatesthat if a customer requests the mustard when he is out of stock, the loss-of-goodwill cost is $25a jar. Bookkeeping expenses for placing an order amount to about $50. During the six-monthreplenishment lead time, Harvey estimates that he sells an average of 100 jars, but there issubstantial variation from one six-month period to the next. He estimates that the standarddeviation of demand during each six-month period is 25. Assume that demand is described bya normal distribution. How should Harvey control the replenishment of the mustard?
Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7,400 copies. The cost of one copy of the book is $13. The holding cost is based on an 15% annual rate, and production setup costs are $140 per setup. The equipment on which the book is produced has an annual production volume of 26,500 copies. Wilson has 250 working days per year, and the lead time for a production run is 15 days. Use the production lot size model to compute the following values: I need help from 4 to 7 please Minimum cost production lot size. Round your answer to the nearest whole number. Do not round intermediate values. Q* = 1214 Number of production runs per year. Round your answer to two decimal places. Do not round intermediate values. Number of production runs per year = 6.09 Cycle time. Round your answer to two decimal places. Do not round intermediate values. T = 41.01 Length of a production run. Round your answer to…
A local company produces a programmable EPROM (erasable programmable read-onlymemory) for several industrial clients. They have experienced a relatively flat demand of 2500 unitsper year for the product. The EPROM is produced at a rate of 10000 units per year. The accountingdepartment has estimated that it costs $50 to initiate a production run, each unit costs the company$2 to manufacture, and the cost of holding is base on a 30% annual interest rate. Determine theoptimal size of a production run, the length of each production run, and the average annual cost ofholding and setup. What is the maximum level of on-hand inventory of the EPROMs?
The Farmer’s Wife is a country store specializing in knickknacks suitable for a farm-house décor. One item experiencing a considerable buying frenzy is a miniature Holstein cow. Average weekly demand is 30 cows, with a standard deviation of 5 cows. The cost to place a replenishment order is $15 and the holding cost is $0.75/cow/year. The supplier, however, is inChina. The lead time for new orders is 8 weeks, with a standard deviation of 2 weeks. The Farmer’s Wife, which is open only 50 weeks a year, wants to develop a continuous review inventory system for this item with a cycle-service level of 90 percent.a. Specify the continuous review system for the cows. Explain how it would work in practice.b. What is the total annual cost for the system you developed?
HAL Ltd. produces a line of high-capacity disk drives for computers. The housings for the drives are produced in Hamilton, Ontario at a rate of 250 housings per month, and shipped to the main plant in Toronto. The housings cost HAL $100 each to produce, and the setup cost for beginning a production run is $500. HAL uses the drive housings at a fairly steady rate of 1400 per year. Assume an annual interest rate of 25% for determining the holding cost. What is the optimal number of housings for HAL to produce in each production run? For the optimal production size, what proportion of each production cycle consists of uptime and what proportion consists of downtime? Assuming that HAL produces the optimal number of housings in each production run, what is the maximum on-hand inventory level of these housings? What is the annual cost of holding and setup?

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