OPERATIONS MANAGEMENT (LL)-W/ACCESS
17th Edition
ISBN: 9781260037821
Author: CACHON
Publisher: MCG
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Chapter 11, Problem 11CQ
Summary Introduction
To explain: The impact on the frequency of the orders.
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Which of the following is a benefit manufacturers receive from selling through a regional distributor/industrial wholesaler?
a.
Regional wholesalers tend to order (directly from manufacturers) in large lot sizes that can be broken down into smaller units---which alleviates the need for manufacturers to ship many more small orders to local retailers.
b.
Regional industrial distributors typically provide their own promotional and technical support for the products they carry and so the manufacturer’s selling costs are reduced.
c.
Because regional industrial distributors own their own inventory, they are motivated to sell the products they have in stock.
d.
All of the above are reasons for using regional distributors/wholesalers.
The company uses cooking oil in its business. The usage of cooking oil is normally distributed with an average of 30 gallons per week and a standard deviation of four gallons per week. The manager asked you to help him decide how to reorder cooking oil in order to achieve a service level of 97.5 percent . Lead time is nine days. a) If cooking oil can be ordered as needed, what reorder point should be used? Answer in 2 decimal places.b) If a fixed interval of 20 days is specified, how much safety stock should the company carry. Answer in 2 decimal places.
Arrow Distributing Corp. likes to track inventory by using weeks of supply as well as by inventory turnover.
Arrow Distributing Corp.
Net Revenue
$15,630
Cost of sales
$12,190
Inventory
$1,090
Total assets
$8,770
a) What is its weeks of supply?
weeks (round your response to two decimal places).
b) What is Arrow's inventory turnover?
times per year (round your response to two decimal places).
c) Suppose a manufacturer has an inventory turnover of 13.5 times per year. Arrow's supply chain performance relative to the manufacturer's, as measured by inventory turnover, is
Chapter 11 Solutions
OPERATIONS MANAGEMENT (LL)-W/ACCESS
Ch. 11 - Prob. 1CQCh. 11 - Prob. 2CQCh. 11 - Prob. 3CQCh. 11 - Prob. 4CQCh. 11 - Prob. 5CQCh. 11 - Prob. 6CQCh. 11 - Prob. 7CQCh. 11 - Prob. 8CQCh. 11 - Prob. 9CQCh. 11 - Prob. 10CQ
Ch. 11 - Prob. 11CQCh. 11 - Prob. 12CQCh. 11 - Prob. 13CQCh. 11 - Over time, consumers have less of a need for a...Ch. 11 - For 10 percent of the products in a category, a...Ch. 11 - Anvils Works requires, on average, 2800 tons of...Ch. 11 - Prob. 3PACh. 11 - Prob. 1CCh. 11 - Prob. 2CCh. 11 - Rob Honeycutt created Timbuk2 to offer consumers...
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- In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. How much safety stock is required to maintain a 95% customer service level? What is the reorder point? Include the z-score you used to get this answer.arrow_forwardThe objective of inventory management is to minimize inventory costs while A.having only enough supplies on hand as needed for production or resale. B. increasing stockouts. C. facilitating electronic data interchange. D. maintaining an adequate supply of goods to satisfy customers. E. eliminating safety stock.arrow_forwardAn importer buys items in bulk from abroad and sells them on to the local population with a fast delivery time. They receive orders for 250 items per month. It costs £30 to have a shipment of new stock delivered, which takes 1 month to arrive after being ordered. Storing each item costs 10p per month. (a) Find the optimal order size and order frequency for the importer to minimise their costs. Justify your answer (b) The seller realises that the demand each month varies, and can be seen as normally distributed with mean 250 and variance 100. (c) They decide to create a buffer stock such that the probability of running out of stock is at most 1%. By what percentage does this increase the importers operating costs?arrow_forward
- Which of the following best explains why distributors help to reduce the space retailersneed to store inventory?a. Distributors allow retailers to receive truckload shipments more frequently.b. Distributors decrease the total distance products travel in the supply chain.c. Distributors allow retailers to receive smaller quantities of each supplier’s product.d. Distributors increase the time that inventory spends in the supply chain.arrow_forwardCalculate how many of each packet should the store order to maximize the revenue associated with information packets, and what is the store’s expected revenue. WITHOUT EXCELarrow_forwardPlease do not give solution in image format thanku Cat Lovers Inc. (CLI) is the distributor of a very popular blend of cat food that sells for $1.25 per can. CLI experiences demand of 569 cans per week on average. They order the cans of cat food from the Nutritious & Delicious Co. (N & D). N & D sells cans to CLI at $0.43 per can and charges a flat fee of $9 per order for shipping and handling. CLI uses the economic order quantity as their fixed order size. Assume that the opportunity cost of capital and all other inventory cost is 15 percent annually and that there are 50 weeks in a year. What is the length of an order cycle in weeks? Cat Lovers Inc. (CLI) is the distributor of a very popular blend of cat food that sells for $1.25 per can. CLI experiences demand of 500 cans per week on average. They order the cans of cat food from the Nutritious & Delicious Co. (N&D). N&D sells cans to CLI at $0.50 per can and charges a flat fee of $7 per order for shipping…arrow_forward
- Imagine that you are the chief operations officer (COO) of Amazon.com. You are interested in creating a competitive advantage for your company (compared to other online retailers) in that you wish to be able to provide to your customers faster shipping than you have been able to provide with your existing set of warehouses and fulfillment centers. It has been decided that using overnight shipping on every order (which would, of course, be about as quick as shipping could be) has been eliminated as a possibility due to being prohibitively expensive. Describe what you would recommend as the COO to improve the speed with which Amazon.com customers receive the products that they have ordered. What negative consequences or disadvantages, if any, do you see as a result of your proposed solution?arrow_forwardWhen a retailer places large order of inventory: a. Ordering costs reduces and holding costs increases b. Ordering costs reduces and holding costs decreases c. Ordering costs increases and holding costs increases d. Ordering costs increases and holding costs decreasesarrow_forwardCharlie’s Pizza orders all of it pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every seven weeks to take orders. Because the orders are shipped directly from Ital, they take six weeks to arrive. Charlies Pizza uses an average of 250 pounds of pepperoni each week, with a standard deviation of 18 pounds. Charlie prides itself on offering only the best –quality ingredients and a high level of service, so it wants to ensure a 95 percent probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 470 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order? (Use the excels NORMSINV( ) function to find the critical value for the given a-level, (Round you z-value to 2 decimal places and final answer tarrow_forward
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