Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 1PA
a)
Summary Introduction
To determine: The order quantity that minimizes Company M annual ordering and holding costs.
b)
Summary Introduction
To determine: The sum of the annual ordering cost and holding costs.
c)
Summary Introduction
To determine: The sum of the annual ordering cost and holding costs per each case sold.
d)
Summary Introduction
To determine: The order quantity that minimizes Company M annual ordering and holding costs in multiples of 50 cases.
e)
Summary Introduction
To determine: The sum of the annual ordering cost and holding costs if Company M takes advantage of the discount.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Antique manufactures old-fashioned telephones for use in movie scenes (and other displays). Antique's annual demand for rotary telephones is 33,000 units per year, so it needs just as many receptors to assemble the phones. Receptors are ordered from a supplier, and shipping and handling costs are $15 per order (regardless of how many units are on order). The holding costs are $7/unit/year. If the current company policy calls for orders of 3,000 receptors, what are the total annual inventory costs for the receptors?
round your final answer to the nearest whole dollar.
Mac-in-the-Box, Inc., sells computer equipment by mail andtelephone order. Mac sells 1,200 flat-bed scanners per year.Ordering cost is $300, and annual holding cost is 16 percentof the item’s price. The scanner manufacturer offers thefollowing price structure to Mac-in-the-Box:
What order quantity minimizes total annual costs?
Helen needs 1159 kgs of chicken per day on average to make enchiladas for her store. The supplier charges a $67 delivery fee per order (which is independent of the order size) and $3.90 per kg. Helen’s annual holding cost is 20%. Assume 52 weeks per year and 7 days per week. If Helen wants to minimize inventory holding and ordering costs, how much chicken should she purchase with each order (in kgs)? Provide your answer as an integer value.Use Econimic Order Quantity formula. The answer is 8,513. Not sure how to get there.
Chapter 12 Solutions
Operations Management
Knowledge Booster
Learn more about
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
- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardRapallo Sneakers, Inc. sells a pair of LG sneakers for $42. Due to the recent fitness craze, these shoes are in high demand: 52 pairs of shoes are sold per week. The ordering cost is $42 per order, and the annual holding cost is 25 percent of the selling price. If the store operates 48 weeks a year, what can you say about the size of the current order quantity of 225 pairs?arrow_forwardSarah's Organic Soap Company makes organic liquid soap. One of the raw materials for her soaps is organic palm oil. She needs 1,000 kg of palm oil per day on average. The supplier charges a $65 delivery fee per order (which is independent of the order size) and $5.75 per kg. Sarah's annual holding cost is 25 percent. Assume she operates and sells five days per week, 52 weeks per year. If Sarah wants to minimize her annual ordering and inventory holding costs, а. |kgs how much palm oil should she purchase with each order (in kg)? (Do not round intermediate calculations.) If Sarah orders 4,250 kg with each order, what would be the annual sum of b. the ordering and holding costs? (Round your answer to 3 decimal places.) If Sarah orders 8,200 kg with each order, what would be the sum of the с. ordering and holding costs per kg sold? per kg (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Sarah's supplier is willing to sell her palm oil at a 5…arrow_forward
- I only need help with part E please.... The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 50 cars per month. The cars cost $80 each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%. (a) Determine the economic order quantity and total annual cost (in $) under the assumption that no backorders are permitted. (Round your answers to two decimal places.) Q*= TC=$ (b) Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost (in $) for the model racing cars. (Round your answers to two decimal places.) Q*= TC=$ (c)What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300 days per year. (Round your answer to two decimal places.) days (d)Would you recommend a…arrow_forwardThe sales of Whole Care mouthwash at Tom's of Maine over the past six months have averaged 2,000 cases per month, which is the current order quantity. Tom's of Maine's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions a) What is EOQ? b) What is the cost reduction? c) What is the reorder point? d) What is Time between Orders (TBO)?arrow_forwardAs inventory manager, you must decide on the order quantity for an item that has an annual demand of 2,000 units. Placing an order costs you $20 each time. Your annual holding cost, expressed as a percentage of average inventory value, is 20 percent. Your supplier has provided the following price schedule:Minimum Order Quantity Price per Unit1 $2.50200 $2.40300 $2.251,000 $2.00What ordering policy do you recommend?arrow_forward
- Zartex Co. produces fertilizer to sell to wholesalers. One raw material – calcium nitrate – is purchased from a nearby supplier at $22.50 per ton. Zartex estimates it will need 5,750,000 tons of calcium nitrate next year. The annual holding cost for this material is 40% of the acquisition cost, and the ordering cost is $595. a) What is the most economical order quantity? b) How many orders will be placed per year? c) How much time will elapse between ordersarrow_forwardThe sales of Whole Care mouthwash at Jen's of Michigan over the past six months have averaged 2,000 cases per month, which is the current order quantity. Jen's of Michigan's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions What is EOQ? What is the cost reduction? What is the reorder point? What is Time between Orders (TBO)?arrow_forwardSarah's Organic Soap Company makes organic liquid soap. One of the raw materials for her soaps is organic palm oil. She needs 1,100 kg of palm oil per day on average. The supplier charges a $55 delivery fee per order (which is independent of the order size) and $5.00 per kg. Sarah's annual holding cost is 20 percent. Assume she operates and sells five days per week, 52 weeks per year. If Sarah wants to minimize her annual ordering and inventory holding costs, a. kgs how much palm oil should she purchase with each order (in kg)? (Do not round intermediate calculations.) If Sarah orders 4,250 kg with each order, what would be the annual sum of b. the ordering and holding costs? (Round your answer to 3 decimal places.) If Sarah orders 7,600 kg with each order, what would be the sum of the C. ordering and holding costs per kg sold? per kg (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Sarah's supplier is willing to sell her palm oil at a 5…arrow_forward
- Sarah's Organic Soap Company makes organic liquid soap. One of the raw materials for her soaps is organic palm oil. She needs 1,100 kg of palm oil per day on average. The supplier charges a $55 delivery fee per order (which is independent of the order size) and $5.00 per kg. Sarah's annual holding cost is 20 percent. Assume she operates and sells five days per week, 52 weeks per year. If Sarah wants to minimize her annual ordering and inventory holding costs, how much palm oil should she purchase with each order (in kg)? a. kgs (Do not round intermediate calculations.) If Sarah orders 4,250 kg with each order, what would be the annual sum of b. the ordering and holding costs? (Round your answer to 3 decimal places.) If Sarah orders 7,600 kg with each order, what would be the sum of the C. ordering and holding costs per kg sold? per kg (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Sarah's supplier is willing to sell her palm oil at a 5…arrow_forwardThe 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_forwardabc company sells 5,500 pens per year with a constant demand throughout the year. ABC purchases the pens at the cost of $300 per unit. ordering cost for the company is$100 per order. holding cost for the company is $10 per year. curently the company is ordering the products in lots of 200 units. what would be the total holding cost for ABC?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY