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The daily demand for Ironcoat paint at the Top Value Hardware Store in North Bay is
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OPERATIONS AND SUPPLY CHAIN MANAGEMENT
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- Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately$30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price perunit on an annual basis. Determine the optimal order quantity and the total annual cost.arrow_forwardSam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…arrow_forwardThe Co-op in problem 6 has discovered that it should establish a safety stock for its sweatshirts. It wants to use a reorder point system with a two-week lead time. The demand over a two-week interval has an average of 450 units and a standard deviation of 250 units.a. What reorder point should the Co-op establish to ensure a 95 percent service level for each order placed?b. What reorder point should be established to ensure that no more than one stockout occurs in the course of a year?c. How much average inventory will the Co-op carry for part b? Include both cycle inventory and safety stock in your answer.d. How often will the Co-op turn over its inventory, using the results from part c?arrow_forward
- The concession stand at the Blacksburg High School stadium sells slices of pizza during soccergames. Concession stand sales are a primary source of revenue for high school athletic programs,so the athletic director wants to sell as much food as possible. However, any pizza notsold is given away to the players, coaches, and referees, or it is thrown away. The athletic directorwants to determine a reorder point that will meet, not exceed, the demand for pizza. Pizzasales are normally distributed, with a mean of 6 pizzas per hour and a standard deviation of2.5 pizzas. The pizzas are ordered from Pizza Town restaurant, and the mean delivery time is30 minutes, with a standard deviation of 8 minutes. Currently, the concession stand places an order when it has 1 pizza left. What level of service does this result in?arrow_forwardABC Inc., purchases Widgets from an overseas supplier under a continuous review system. The average demand for a popular model is 300 units a day with a Lead Time standard deviation of 70 units. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a widget is $0.25 per year and the company policy is to maintain a 98% service level. ABC operates 200 days per year. What is the additional cost in $ of holding the safety stock necessary to maintain the 98% service level? What service level in % does a reorder point of 1,570 imply?arrow_forwardA subcontracting firm Gamma Pharmaceuticals Ltd. located in Western India dealing with generic medicines operates 50 weeks per year. The following information is available regarding the major ingredient used for the medicine:Weekly Demand= 60 unitsStandard deviation of weekly demand = 9 unitsOrdering costs (Co) = Rs. 64/ orderHolding costs (Ch) = Rs.40/unit/yearCycle-service level = 90% (z-value = 1.28)Lead time = 2 weeksNumber of weeks per year = 50 weeksd) Using the fixed order quantity system to control inventory, calculate the EOQe) Compute the reorder point and state the order decision rulef) Compute the total variable cost of inventory.arrow_forward
- The average daily demand and standard deviation of daily demand for a product is 800 and 12 respectively. Replenishment lead time from the supplier in 4 days. The fixed cost and holding st are $15,000 and $18, respectively.If the service level is 95% then calculate a) Average demand during lead time b) Safety stock c) Reorder level d) Order quantityarrow_forwardPM Computers assembles personal computers from generic components. It purchases its color monitors from a manufacturer in Taiwan; thus, there is a long and uncertain lead time for receiving orders. Lead time is normally distributed, with a mean of 25 days and a standard deviation of 10 days. Daily demand is also normally distributed, with a mean of 2.5 monitors and a standard deviation of 1.2 monitors. Determine the safety stock and reorder point corresponding to a 90% service level.arrow_forwardThe Great North Supermarket stocks Munchkin Cookies. Demand for Munchkins is 5000 boxes per year (365 days). It costs the store $60 per order of Munchkins, and it costs $0.70 per box per year to keep the cookies in stock. Once an order for Munchkins is placed, it takes four days to reveive the order from a food distributor. Determine the following: a. Optimal order size (EOQ) b.Minimum total annual inventoy cost c. Reorder point (R) d. Number of orders e. Time between ordersarrow_forward
- IKEA purchases desks from a supplier in Germany. Their stores in the US sell 4,000 units of desks each month. Each unit costs $300, and the company has an annual holding cost of 20%. Placing a replenishment order incurs clerical costs of $500 per order. Theshipping company charges $1,500 as a fixed cost per shipment. IKEA currently places a replenishment order every two months for 3,000 units. What is the annual ordering cost, annual holding cost, and annual total inventory cost under thecurrent replenishment plan? Group of answer choices 32,000, 272,000, and 240,000 24,000, 264,000, and 240,000 24,000, 240,000, and 264,000 32,000, 240,000, and 272,000arrow_forwardThe annual demand for sugar at a local soft drink company is normally distributed with a mean of 800 tons and a standard deviation of 25 tons. The sugar sells for OMR 500 each ton, and the annual inventory holding cost rate is 10%. Ordering costs are OMR5 per order. The delivery time for sugar is 5 working days. Assume that there are 250 working days in a year. 1. Determine the optimal order quantity. 2. What size of safety stock should the company keep at a service-level of 90%? 3. Suppose they keep 8 extra tons in inventory as a safety stock. What is the service-level obtained? 4. Evaluate the fill rate Beta for a safety stock of 5 tons. 5. What is the expected number of units short per year? 6. Compare the level of safety stock for each policy =Beta=0.95.arrow_forwardAV City stocks and sells a particular brand of laptop. Itcosts the firm $625 each time it places an order with themanufacturer for the laptops. The cost of carrying one laptop in inventory for a year is $130. The store manager estimates that total annual demand for the laptops will be 1500units, with a constant demand rate throughout the year.Orders are received within minutes after placement from alocal warehouse maintained by the manufacturer. The storepolicy is never to have stockouts of the laptops. The storeis open for business every day of the year except ChristmasDay. Determine the following:a. Optimal order quantity per orderb. Minimum total annual inventory costsc. The number of orders per yeard. The time between orders (in working days)arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning