Practical Management Science, Loose-leaf Version
5th Edition
ISBN: 9781305631540
Author: WINSTON, Wayne L.; Albright, S. Christian
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 65P
Summary Introduction
To determine: The optimal ordering policy when there are no shortages and also while relaxing the constraint.
Inventory and supply chain models:
The functions of inventory and supply chain are one of the most important business decision areas for an organization. The first important aspect of these concepts is to have adequate inventory on hand. The second important aspect is to carry a little amount of inventory as possible.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $6 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $2 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 325,000 and a standard deviation of 150,000. Use Table 13.4
a.
How many kilograms should Montanso place in the warehouse before the growing season? Use Table 13.4 and round-up rule.
b.
If Montanso put 400000 kgs in the warehouse, what is its expected revenue (include both domestic revenue and…
The materials manager of a tire manfacturer must predict periodically place order for a key chemical one of the raw materials used in manufacturing uses the chemical at a rate of 300lbs each week and the lead time of delivery is 4 days. Assume that the manufacturing operation runs 5 days a week. At what point should the chemical be reorderedd
a. when 1200lbs are remaining
b. where 0lbs are remaining
c. where 375lbs are remaining
d. when 240lbs are rem
Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Monsanto $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000.
Round your answer to 2 digits after the decimal point if it is not an integer. Do NOT use comma in your numeric answers. Use excel for accurate numbers. Don't round until the end.
Monsanto’s maximum profit for this seed is $[xa].
The underage cost is $[xb]. The…
Chapter 12 Solutions
Practical Management Science, Loose-leaf Version
Ch. 12.4 - Prob. 1PCh. 12.4 - Prob. 2PCh. 12.4 - Prob. 3PCh. 12.4 - Prob. 4PCh. 12.4 - Prob. 5PCh. 12.4 - Prob. 6PCh. 12.4 - Prob. 7PCh. 12.4 - Prob. 8PCh. 12.4 - Prob. 9PCh. 12.4 - Prob. 10P
Ch. 12.4 - Prob. 11PCh. 12.5 - Prob. 12PCh. 12.5 - Prob. 13PCh. 12.5 - Prob. 14PCh. 12.5 - Prob. 15PCh. 12.5 - Prob. 16PCh. 12.5 - Prob. 17PCh. 12.5 - Prob. 18PCh. 12.5 - Prob. 19PCh. 12.5 - Prob. 20PCh. 12.5 - Prob. 21PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 42PCh. 12 - Prob. 43PCh. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Prob. 53PCh. 12 - Prob. 54PCh. 12 - In terms of K, D, and h, what is the average...Ch. 12 - Prob. 56PCh. 12 - Prob. 57PCh. 12 - Prob. 58PCh. 12 - Prob. 59PCh. 12 - Prob. 60PCh. 12 - Prob. 61PCh. 12 - Prob. 62PCh. 12 - Prob. 63PCh. 12 - Prob. 64PCh. 12 - Prob. 65PCh. 12 - Prob. 66PCh. 12 - Prob. 67PCh. 12 - Prob. 68PCh. 12 - Prob. 69PCh. 12 - Prob. 70PCh. 12 - Prob. 71PCh. 12 - Prob. 1.1CCh. 12 - Prob. 1.2CCh. 12 - Prob. 1.3C
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
- Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.arrow_forwardIn Problem 12 of the previous section, suppose that the demand for cars is normally distributed with mean 100 and standard deviation 15. Use @RISK to determine the best order quantityin this case, the one with the largest mean profit. Using the statistics and/or graphs from @RISK, discuss whether this order quantity would be considered best by the car dealer. (The point is that a decision maker can use more than just mean profit in making a decision.)arrow_forwardA 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?arrow_forward
- An online retailer sells 1,500 t-shirts per year. The cost of the t-shirts to the store is $3.00 and the cost of placing an order is $15 per order. It cost $0.60 per t-shirt per year for the retailer to hold the t-shirts. The retailer sells the t-shirts for $9.99. Determine (a) the optimal order quantity, (b) the order frequency (c) the annual holding and setup cost.arrow_forwardOfficePro sells calculators at a rate of 3 per day. When the company places an order from its supplier, the lead time varies. The distribution of the lead time is:L (in days)P(L) 80.3 90.3 100.2 110.08 120.07 130.05 The figures represent days and lead time respectively. The company has already found the optimal order size is 80 calculators. What should be the reorder level if the company will take no more than a 10 percent chance of being out of calculators when an order is placed?arrow_forwardXYZ is a multinational corporation based in the US. Its manufacturing facilities arelocated in Pittsburgh and hence its labor and manufacturing costs are incurred in USdollars (USD). A large fraction of its sales, however, are made to German customers whopay for the goods in Deutschemarks (GDM). There is a six-month lead time between theplacement of a customer order and delivery of the product. XYZ's cost of production is80% of the sale price. Suppose XYZ receives a $1MM GDM order and that the currentUSD/GDM exchange rate is 0.60 (i.e. 1 GDM = 0.60 USD). The cost of production of thisorder is $480,000 (0.60 x $1MM x 0.80). The exchange rate six months from now is, ofcourse, uncertain in which case XYZ is exposed to exchange rate risk.RequiredExplain how the company can use forward contract for hedging purposesarrow_forward
- XYZ’s Hardware is a small family business in Dubai, UAE. The owners, Abdullah and Omar,must use every square foot of store space as profitably as possible. They have never keptdetailed inventory or sales records. As soon as a shipment of goods arrives, the items areimmediately placed on store shelves. Invoices from suppliers are only kept for tax purposes.When an item is sold, the item number and price are rung up at the cash register. The ownersuse their own judgment in identifying items that need to be reordered.a). How could information systems help Abdullah and Omar run their business?b). What data should these systems capture?arrow_forwardYou are starting a Christmas tree business. You can purchase trees from local farmers at $25 per tree. You are able to sell the trees at $75 per tree. Any leftover trees can be sold to the local wood chip company at $5 per tree. Assume that the demand follows a uniform distribution ~U(94,382). How many trees should you stock through the holiday season? Note: round your answer to the nearest whole number. Answer: 285 Check Xarrow_forwardAAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3 e. Which alternative should be chosen based on the minimax regret criterion? f. Which alternative should be chosen using the expected monetary value (EMV) criterion? g. What is the expected value under perfect information (EVPI)? Show Workarrow_forward
- AAA auto supply store sells snow tires which are ordered every Friday to meet next week's demand. The sales price for the most popular size is $50 per tire and its cost for AAA is $35. If too many tires are ordered AAA incurs an inventory carrying cost of $2 per tire. If AAA is out of stock, it forgoes the profits from missed sales. AAA has the option to order 100, 150, or 200 tires to meet next week's demand which can be either 100, 150, or 200 tires.Based on its historical demand distribution, assume that AAA Inc. has determined the followingprobability information: P(100) = 0.4, P(150) = 0.3, and P(200) = 0.3.a. Which alternative should be chosen based on the maximax criterion?b. Which alternative should be chosen based on the maximin criterion?c. Which alternative should be chosen based on the Lapalce criterion?d. Which alternative should be chosen based on criterion of realism with alpha = 0.7?e. Which alternative should be chosen based on the minimax regret criterion?f. Which…arrow_forwardA retail store stocks an item of household electrical lighting. The store receives its stock from a large warehouse and the supply period is 3 working days. The store adopts a fixed policy of reorder point (R) at 15 units with a fixed quantity (Q) = 40 units. The current available stock at the end of the first day = 19 units and the demand for this item occurs daily. The stock status (IP) is compared with the reorder point (R) after each order if necessary an order is issued and the stock status is updated. Based on the planned demand in the table below, including information about Scheduled Receipts and Backorders : Indicate when the request should be made using the continuous review (Q) system - explaining your answer in the short comment. :Decision | Redial | Inventory Status | Deferred | Scheduled | Inventory I the | Day Decide point (IP)| Orders | Orders Available | demand when to (R) ' Available stock = (BO) (SR) (OH) | (daily (d request scheduled + daily) | using the | orders…arrow_forwardA retail store stocks an item of household electrical lighting. The store receives its stock from a large warehouse and the supply period is 3 working days. The store adopts a fixed policy of reorder point (R) at 15 units with a fixed quantity (Q) = 40 units. The current available stock at the end of the first day = 19 units and the demand for this item occurs daily. The stock status (IP) is compared with the reorder point (R) after each order if necessary an order is issued and the stock status is updated. Based on the planned demand in the table below, including information about Scheduled Receipts and Backorders : Indicate when the request should be made using the continuous review (Q) system - explaining your answer in the short comment. :Decision | Redial | Inventory Status | Deferred | Scheduled Inventory the | Day Decide point (IP) | Orders Orders Available | demand when to (R) | Available stock = (BO) (SR) (OH) | (daily (d request scheduled + daily) using the “ orders (use…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,