Concept explainers
In Problem 12-2 in Chapter 12, Carpel City orders Soft Shag carpet from its own mill. Using the three-month moving average
Want to see the full answer?
Check out a sample textbook solutionChapter 13 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
Additional Business Textbook Solutions
Business in Action (8th Edition)
Operations Management, Binder Ready Version: An Integrated Approach
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
Operations Management: Processes and Supply Chains (11th Edition)
Operations Management
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
- total inventory cost An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery’s value. It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month. a) Determine the ordering, holding, and total inventory costs for the current order quantity. b)Determine the ordering, holding, and total inventory costs for the EOQ. How has ordering cost changed? Holding cost? Total inventory cost?arrow_forwardConsider the supply : Last year, the retailer’s weekly variance of demand was 200 units.The variance of orders was 500, 600, 750, and 1,350 units for theretailer, wholesaler, distributor, and manufacturer, respectively.(Note that the variance of orders equals the variance of demandfor that firm’s supplier.)a) Calculate the bullwhip measure for the retailer.b) Calculate the bullwhip measure for the wholesaler.c) Calculate the bullwhip measure for the distributor.d) Calculate the bullwhip measure for the manufacturer. e) Which firm appears to be contributing the most to the bull-whip effect in this supply chain?arrow_forwardThe purchasing manager for the Atlantic Steel Company must determine a policy for orderingcoal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate,and the firm operates 360 days per year. The purchasing manager has determined that the orderingcost is $80 per order and the cost of holding coal is 20% of the average dollar value of inventoryheld. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton forthe coming year. If 5 days of lead time are required to receive an order of coal, how much coal should be on hand when an order is placed?arrow_forward
- Company B is a retailer of mobile phones in Australia that works 250 days in a year. Themanager would like you to determine a minimum-cost inventory plan for an upcoming mobilephone to be launched in the market. They have collected the following information:• Annual demand: 750 phones• Phone cost: $1,005 each• Phone RRP: $1,149 each• Net weight: 167 g each• Tare weight: 257 g each• Annual inventory holding cost: 27.5%• Cost per order to replenish inventory: $81.71• Annual in-transit holding cost: 10%• Freight rate (per kg): $8.10• Freight-related charges (per shipment): $276.50 (i.e. handling fee, dangerous goodfee, and lithium battery fee)• Time to process order for freight: 2 day• Freight transit time: 5 daysThe manager wants you to determine the following information:a. Economic order quantityb. The total purchasing costc. The total ordering costd. The total inventory holding coste. The total transportation cost (by weight)f. The total freight-related cost (by shipment)g. The total…arrow_forwardA Mercedes dealer pays $40,000 for each car purchased (wholesale price). The annual holding cost is estimated to be 30% of the dollar value of inventory. The dealer sells an average of 1200 cars per year. They believe that demand is backlogged but estimate that if they are short one car for one year, the loss in future profits is about 10% of the wholesale price. Each time the dealer places an order for cars, ordering costs amount to $1600. Assume there are 360 work days per year. Question: If the Mercedes dealer wants to limit backorders so that they occur 20% of the time, what is the maximum number of backorders that should be allowed (assuming the optimal order quantity doesn't change)?arrow_forwardThe following lots of a particular commodity were available for sale during the year Beginning inventory 9 units at $47 First purchase 15 units at $50 Second purchase 20 units at $21 Third purchase 18 units at $58 The firm uses the periodic system, and there are 27 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year rounded to nearest dollar according to the average cost method? Do not round intermediate calculations. a.$1,269 b.$1,233 c.$1,323 d.$1,148arrow_forward
- A Mercedes dealer must pay $20,000 for each car purchased. The annual holding cost is estimated to be 25% of the dollar value of inventory. The dealer sells an average of 500 cars per year. He considers the lawsuit to be behind schedule but estimates that if he is short on one car in one year he will lose $20,000 worth of future profits. Each time the dealer places an order for automobiles, the ordering cost adds up to $10,000. Determine the distributor's optimal ordering policy. What is the maximum deficit that will occur? What is the total annual cost?arrow_forwardThe manager of Alaina’s Garden Center must make the annual purchasing plans for rakes, gloves, and other gardening items. One of the items the company stocks is Fast-Grow, a liquid fertilizer. The sales of this item are seasonal, with peaks in the spring, summer, and fall months. Quarterly demand (in cases) for the past 2 years follows: Quarter Year 1 Year 2 1 2 3 4 45 339 299 222 67 444 329 283 Total 905 1,123 If the expected sales for Fast-Grow are 1,850 cases for year 3, use the multiplicative seasonal method to prepare a forecast for each quarter of the year.arrow_forwardThe Shotz Brewery produces an ale, which it stores in bar-rels in its warehouse and supplies to its distributors on de-mand. The demand for ale is 1800 barrels per day. The brewery can produce 3000 barrels per day. It costs $7500to set up a production run for ale. Once it is brewed, the aleis stored in a refrigerated warehouse at an annual cost of$60 per barrel. Determine the economic order quantity andthe minimum total annual inventory cost.arrow_forward
- 1. (a)A computer products store colour graphics monitors, and the daily demand is normally distributed, with a mean of 1.6 monitors and standard deviation of 0.4 monitor. The lead time to receive an order from the manufacturer is 15 days. Determine the reorder point that will achieve a 98% service level. (b)Lumumba Carpet Discount Store sells Super Shag carpet. The average daily customer demand for the carpet stocked by the store is normally distributed, with a mean daily demand of 30 metres and a standard deviation of 5 metres of carpet per day. The lead time for receiving a new order of carpet is 10 days. Advice the the store if they desire a reorder point and safety stock for a service level of 95%, with the probability of a stockout equal to 5%.arrow_forwardCompany B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She has collected the following information: Annual demand: 1000 phones• Phone cost: $1,214 each• Phone RRP: $1,349 each• Net weight: 163 g each• Tare weight: 277 g each• Annual inventory holding cost: 15%• Cost per order to replenish inventory: $75• Annual in-transit holding cost: 10%• Freight rate: $8.10 per kg• Time to process order for freight: 1 days• Freight transit time: 3 days Solve this problem using a non-linear programming (NLP) model to determine the followings:a. Economic order quantity for the phone in units and in kgb. The total cost for purchasing the phonesc. The total cost for orderingd. The total cost for holding the inventorye. The total cost for transportationf. The total cost for holding the phones during transitg. The total cost for this inventory planh. The number of…arrow_forwardCompany B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She has collected the following information: • Annual demand: 1000 phones • Phone cost: $1,214 each • Phone RRP: $1,349 each • Net weight: 163 g each • Tare weight: 277 g each • Annual inventory holding cost: 15% • Cost per order to replenish inventory: $75 • Annual in-transit holding cost: 10% • Freight rate: $8.10 per kg • Time to process order for freight: 1 days • Freight transit time: 3 days Solve this problem using a non-linear programming (NLP) model to determine the followings:d. The total cost for holding the inventory e. The total cost for transportation f. The total cost for holding the phones during transit g. The total cost for this inventory plan h. The number of orders i. Ordering point j. The profit from this inventory planarrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning