You are in the process of deciding the optimal order quantity of shampoopacks for a hotel. The supplier charges you $47 per order and your stockroomcosts approximately $0.69 per shampoo pack per year to store the product.Based on prior research, you were able to determine that the hotel goesthrough approximately 94 shampoo packs per day. They hold 0 safety stock.The supplier is willing to give the following quantity discounts for the product.Using the order quantity that will minimize total cost, what is the total annualcost?Quantity1 - 1499$2.25$2.10$2.05$2.03Note: Round your answer to 2 decimal places. Do NOT include $ sign or acomma. For example, answer like 50246 and NOT $50,246Answer:1500 - 39994000 - 79998000+PriceCheck

Ans) First find EOQ and its cost:

Answered: You are in the process of deciding the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 14P

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Determine the order quantity, reorder point, annual holding cost, and order cost, then assume a price break of $50 per order was offered for purchase quantities of 2,000 or more units per order. If you took advantage of this price break, how much would you save annually? When calculating the z-score, use the NORM.S.INV() function from excel.
A small firm uses 3,400 lbs of chemical dye a year. Currently the firm purchases 300 lbs per order and pays $3 per order. The supplier has just announced that orders of 1,000 lbs or more will be filled at a price of $2per lb. The firm incurs a cost of $100 each time it submits an order and assigns an annual holding cost of 17% of the purchase price. If the supplier offered the discount at 1,500 lbs instead of 1,000 lbs, what order size would minimize total cost. What is the total cost at 1500
Under the last-in, first-out (LIFO) inventory valuation method, a price index for inventory must be established for tax purposes. The quantity weights are based on year-ending inventory levels. Unit Price ($) Product EndingInventory Beginning Ending A 500 0.15 0.19 B 50 1.40 1.80 C 100 4.50 4.20 D 60 12.00 13.60 Use the beginning-of-the-year price per unit as the base-period price and develop a weighted aggregate index for the total inventory value at the end of the year. (Round your answer to the nearest integer.) I = ?? What type of weighted aggregate price index must be developed for the LIFO inventory valuation? -Paasche index -Laspeyres Index
Hayes electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters as follows: (a) both ordering cost and carrying cost are 10% less that originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.
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?
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.
Answer the given question with a proper explanation and step-by-step solution. An E-commerce firm has four regional fulfillment centers (warehouses). Weekly demand for an item (Product_A) at each warehouse is random and is normally distributed with a mean of 10,000 per week and a standard deviation of 2,000 units per week. Product_A’s unit cost is $10. The inventory holding cost of the company is 25% per year. Assume 50 weeks per year. Each replenishment order from the supplier of Product_A costs $1,000, which includes the costs associated with placing the order, transportation, receiving, inspection, and put-away labor expenses. The replenishment lead time from the supplier is 1 week. The company’s service level goal is 95% (probability of having sufficient inventory to meet demand). On average, how long does a unit of inventory spend in the warehouse before being sold? Hint: Think Little's Law 2.5 weeks 6.6 weeks 5.3 weeks 1.3 weeks
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Sarah is a buyer for a department store. A supplier offers her a 5 percent discount if shetriples her usual order quantity. Which of the following best explains why Sarah shouldtake the deal?a. Even though the increase in the operating costs is likely to exceed the benefit of the5 percent discount, Sarah feels that her customers expect the lowest possible price.b. Sarah hopes that customers are likely to purchase more if they see an increase in theinventory in the store.c. Sarah knows that even though she may triple her order quantity, this would increaseher operating costs by far less than a factor of three.d. Sarah knows that the sum of operating costs is probably less than 5 percent of thepurchase cost, so an increase in the operating costs is unlikely to be a concern.
A phone retailer buys three phone models from the same supplier. The retailer pays per unit cost of each product of $100, $120 and $150 for the three models. The supplier charges $200 per order, independent of the quantity and models of the products purchased, which includes the cost of order processing, shipping and insurance. Holding costs are based on a 25 percent annual interest rate. The retailers sells an average of 35,000, 30,000 and 25,000 units of the three models, respectively. a) Analytically, i.e. without the use of a computer, provide a heuristic for the three-product ordering decision. b) Find the optimal procurement decision numerically
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?

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