OPERATION MANAGEMENT
2nd Edition
ISBN: 9781260242423
Author: CACHON
Publisher: MCG
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Chapter 10, Problem 7CQ
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To determine: The correct option.
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What policy results in stockouts 10% of the time?
Calculate total annual cost for the alternative suppliers for aproduct with following characteristics: montly demand; mean: 5000, standard deviation 2000 Holding cost: 30% Cycle service level: 98%
Using EOQ formula, find the lot size. Don’t forget to add ordering cost to the total cost!
Supplier 1
Supplier 2
Supplier 3
Ordering Cost(per order )
1000
2000
5000
Cost
10
9
8
Average Lead Time ( month )
0.5
2
2
Lead time std deviation ( month )
0.5
1
2
Describe the 3 differences between a fixed-quantity (Q) and a fixed-period (P) inventory
ns4
a.
system?
Fixed Quality Inventory
Fixed Period Inventory
Chapter 10 Solutions
OPERATION MANAGEMENT
Ch. 10 - It is costly to hold inventory, but inventory can...Ch. 10 - A delivery truck from a food wholesaler has just...Ch. 10 - Prob. 3CQCh. 10 - Prob. 4CQCh. 10 - Prob. 5CQCh. 10 - Prob. 6CQCh. 10 - Prob. 7CQCh. 10 - Prob. 8CQCh. 10 - Prob. 9CQCh. 10 - Prob. 10CQ
Ch. 10 - Prob. 11CQCh. 10 - Prob. 12CQCh. 10 - Prob. 13CQCh. 10 - Prob. 14CQCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - An electronics manufacturer has 25 days-of-supply...Ch. 10 - Prob. 5PACh. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 10PACh. 10 - Prob. 11PACh. 10 - Prob. 12PACh. 10 - A retailer has annual sales of 500,000 and an...Ch. 10 - An online shoe retailers annual cost of holding...Ch. 10 - Prob. 15PACh. 10 - Prob. 16PACh. 10 - Prob. 17PACh. 10 - Prob. 18PACh. 10 - Prob. 19PACh. 10 - Prob. 1CCh. 10 - Prob. 3CCh. 10 - Prob. 4C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Suzuki is a company that manufactures motorcycles. It produces 450 motorcycles a month. It buys tyres for motorcycles from Dunlop at a cost of $20 per tyre. The company’s inventory carrying cost per tyre is estimated to be 15% of the cost per tyre. The cost per order is calculated at 250% of the cost per tyre. Rquirement: i) Calculate the EOQ. ii) Determine the number of orders per year? iii) Compute the total cost.arrow_forward21- Which one of the following represent FIFO method of inventory evaluation? a. Old items remain in inventory b. Old merchandise is sold first c. New merchandise is sold first d. Average number of goods are soldarrow_forwardECUR UMIC ORDER QUANTITY CALCULATIONS (2 QUESTIONS) Company uses 800 units of a product per year on a continuous basis. The product year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the a safety stock of 5 days usage in inventory. has carrying costs of $50 A. Calculate the economic order quantity a. 98 B. Determine the reorder a. 150 days (3 CASH DISCOUNTS point. ONS) (Assume (EOQ). a 360-day year.) per unit per firm requiresarrow_forward
- Al Fursan Inc. needs 300 kgs of a material per month (four weeks). It costs RO 10 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 15 % of purchase price. The price RO1 per kg. The company is operating 6 days per week. What is the expected time (in days) between order? Round-up to the nearest integer Select one: a. 55 b. 53 c. 207 d. 105 e. 58arrow_forwardGiven this information:Lead-time demand 600 poundsStandard deviation of lead time demand 52 pounds (Assume normality.)Acceptable stockout risk during lead time 4 percenta. What amount of safety stock is appropriate?b. When should this item be reordered?c. What risk of stockout would result from a decision not to have any safety stock?arrow_forwardWhat is the purpose of inventory control?arrow_forward
- Stationery Supplies orders plastic erasers from a company in Nürnberg, Germany.It takes six weeks to ship the erasers from Germany to Utah. Stationery Suppliesmaintains a standing order of 200 erasers every six months (shipped on the first ofJanuary and the first of July).a. Assuming the ordering policy the store is using does not result in large buildupsof inventory or long-term stock-outs, what is the annual demand for erasers?b. Draw a graph of the pipeline inventory (that is, the inventory ordered but notreceived) of the erasers during one year. What is the average pipeline inventoryof erasers during the year?arrow_forwardDescribe the difference between a fixed-quantity (Q) anda fixed-period (P) inventory system.arrow_forward03) Halifax Souvenir Company currently orders 500 units four times each year. Each order costs $12 and each unit costs $1.20 per year to carry. On average, it takes 5 days to receive an order from the supplier. The company operates 250 days per year. Required: 1. What is the EOQ? 2. Calculate total annual inventory cost under EOQ. 3. What is the current inventory cost? 4. What is the re-order point?arrow_forward
- A, B , & Carrow_forward32 A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level? Select one: a. .40 b. .84 c. .60 d. .20 e. unable to determine given the above informationarrow_forwardanswer choices for the last 3 parts are A,B, or Carrow_forward
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