Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Question
Chapter 12, Problem 2PA
a)
Summary Introduction
To determine: The quantity of palm oil (Kg) that must be purchased with each order to minimize the annual ordering and inventory 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 Kg sold.
d)
Summary Introduction
To determine: The sum of the annual ordering cost and holding costs if Person S takes advantage of the discount.
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Sarah'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…
Sarah’s Organic Soap Company makes organic liquid soap. One of the raw materials for her soaps is organic palm oil. She needs 1000 kg of palm oil per day, on average. The supplier charges a $60 delivery fee per order (which is independent of the order size) and $4.75 per kg. Sarah’s annual holding cost is 25 percent. Assume she operates and sells five days per week, 52 weeks per year. a. If Sarah wants to minimize her annual ordering and inventory holding costs, how much palm oil should she purchase with each order (in kg)? b. If Sarah orders 4000 kg with each order, what would be the annual sum of the ordering and holding costs? c. If Sarah orders 8000 kg with each order, what would be the sum of the ordering and holding costs per kg sold? d. Sarah’s supplier is willing to sell her palm oil at a 5 percent discount if she purchases 15,000 kg at a time. If she were to purchase 15,000 kg per order, what would be her annual sum of the ordering and holding costs?
Need a,b,c,d
Chapter 12 Solutions
Operations Management
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- abc 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_forwardplease answer within 30 minutes..arrow_forwardSam’s Cat Hotel operates 52 weeks per year, 7 days per week,and uses a continuous review inventory system. It purchaseskitty litter for $10.75 per bag. The following information isavailable about these bags.Demand = 95 bags>weekOrder cost = $58>orderAnnual holding cost = 25 percent of costDesired cycle@service level = 90 percentLead time = 4 weeks 128 working days2Standard deviation of weekly demand = 16 bagsCurrent on-hand inventory is 315 bags, with no open ordersor backorders.a. What is the EOQ? What would be the average time betweenorders (in weeks)?b. What should R be?c. An inventory withdrawal of 10 bags was just made. Is ittime to reorder?d. The store currently uses a lot size of 490 bags (i.e.,Q = 490). What is the annual holding cost of this policy?Annual ordering cost? Without calculating the EOQ, howcan you conclude from these two calculations that thecurrent lot size is too large?e. What would be the annual cost saved by shifting from the490-bag lot size to the EOQ?arrow_forward
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