Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 14, Problem 18CQ
Summary Introduction
To identify: The change that location pooling is most effective at generating in performance objectives.
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Location pooling is most effective at generating which of the following changes to performance objectives? a. Increasing the gross marginb. Increasing the target in-stock probabilityc. Decreasing on-order inventoryd. Decreasing days of supply of on-hand inventory
At Dot Com, a large retailer of popular books, demand is constant at 32,000 books per year. The cost of placing an order to replenish stock is $10, and the annual cost of holding is $4 per book. Stock is received 5 working days after an order has been placed. No backordering is allowed. Assume 300 working days a year.a. What is Dot Com’s optimal order quantity?b. What is the optimal number of orders per year?c. What is the optimal interval (in working days) between orders?d. What is demand during the lead time?e. What is the reorder point?f. What is the inventory position immediately after an order has been placed?
Which of the following assumptions is not one of the Economic Order Quantity Model assumptions, which is the most basic of the Inventory models?
a) No out of stock allowed
B) Materials must be delivered in one go c) Ordening and receving times are known and fixed
d) The supplier is allowed to make a dscourt based on the order quuantity
e) Demand is known and foxed
Chapter 14 Solutions
Operations Management
Ch. 14 - Demand in each period follows the same normal...Ch. 14 - Prob. 2CQCh. 14 - For products with slow-moving demandfor example,...Ch. 14 - Prob. 4CQCh. 14 - Prob. 5CQCh. 14 - Prob. 6CQCh. 14 - Prob. 7CQCh. 14 - Prob. 8CQCh. 14 - If the target in-stock probability increases, then...Ch. 14 - Prob. 10CQ
Ch. 14 - Prob. 11CQCh. 14 - Prob. 12CQCh. 14 - Prob. 13CQCh. 14 - Prob. 14CQCh. 14 - Prob. 15CQCh. 14 - Prob. 16CQCh. 14 - Prob. 17CQCh. 14 - Prob. 18CQCh. 14 - Prob. 19CQCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - You are the owner of Hotspices.com, an online...Ch. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 1CCh. 14 - Prob. 2CCh. 14 - Prob. 3CCh. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...Ch. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...
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- A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .99. The order interval is 12 days, and lead time is 4 days. Average demand for one item is 63 units per day, and the standard deviation of demand is 6 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table. Use Table. Cycle On Hand 1 38 2 10 3 93 Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number) Cycle Units 1 1019 Numeric ResponseEdit Unavailable. 1019 incorrect. 2 1047 Numeric ResponseEdit Unavailable. 1047 incorrect. 3 964 Numeric ResponseEdit Unavailable. 964 incorrect.arrow_forwardAt sejahtera.com, a large retailer of popular books, demand is constant at 32,000 books per year. The cost of placing an order to replenish stock is $10, and the annual cost of holding is $4 per book. Stock is received five working days after an order has been placed. The backordering is not allowed. Assume 300 working days a year. a. calculate sejahtera.com’s optimal order quantity. b. calculate the optimal number of orders per year c. Calculate the optimal interval (in working days) between orders. d. Determine the demand during the lead time. e. Determine the reorder point. f. Determine the inventory position immediately after an order has been placed. g. Draw the model to represent the case.arrow_forwardAt Dot Com, a large retailer of popular books, demand is constant at 20,400 books per year. The cost of placing an order to replenish stock is $75, and the annual cost of holding is $6.00 per book. Stock is received 6 working days after an order has been placed. No backorder is allowed. Assume 250 working days a year. **(Enter your response rounded to the nearest whole number.)** Dot Com's optimal order quantity is ______ books. What is the optimal number of orders per year? What is the optimal enterable quotation in working days quotation between orders? What is the demand during the lead time? What is the reorder Point? What is the inventory position immediately after an order has been placed?arrow_forward
- jeweler purchases silver for use in its products. The firm uses 190 grams of silver per week and purchases silver for $0.52 per gram from a supplier. Each time the firm orders silver from the supplier, the firm must pay a $11 order processing charge. The firm's annual holding cost percentage is 38%. Do not round intermediate calculations. Assume there are 52 weeks in a year and round your answer to two decimal places. If the jeweler orders 1,950 grams of silver with each order, what is the sum of the annual holding and ordering costs? dollars Please do fast ASAP fastarrow_forwardThe basic EOQ model is based on all the following assumptions except: A. Annual demand is known and constant.B. The item is always available when needed.C. Estimates of ordering and carrying costs are accurate.D. Order is instantaneously received exactly when previous inventory has just been used up.arrow_forwardThe basic EOQ model is based on all the following assumptions except: * A. Annual demand is known and constant.B. The item is always available when needed.C.Estimates of ordering and carrying costs are accurate.D.Order is instantaneously received exactly when previous inventory has just been used up.arrow_forward
- At Dot Com, a large retailer of popular books, demand isconstant at 20,400 books per year. The cost of placing anorder to replenish stock is $35, and the annual cost of holdingis $6 per book. Stock is received 5 working days after an orderhas been placed. No backordering is allowed. Assume 250working days a year.a. What is Dot Com’s optimal order quantity?b. What is the optimal number of orders per year?c. What is the optimal interval (in working days) betweenorders?arrow_forwardFor a company operating 300 days a year, the annual demand is 63,000 units, the lead time is 4 days, the ordering cost per order is BD 80 and the inventory turnover is 12, the reorder point is A. Every 12 days B. Every 4 days C. When 175 units remain D. When 840 units remainarrow_forwardA product has a reorder point of 110 units and is ordered four times a year on average. The following table shows the historical distribution of demand values observed during lead time. Managers have noted that stockouts occur 30 percent of the time with this policy, and they question whether a change in inventory policy, to include some safety stock, might be an improvement. The managers realize that any safety stock would increase the service level, but they are worried about the increased costs of carrying the safety stock. Currently, stockouts are valued at $20 per unit per occurrence, while inventory carrying costs are $10 per unit per year. Demand Probability 100 0.20 110 0.35 120 0.30 130 0.15 What level of safety stock is best?arrow_forward
- The annual demand for a product is 14,500 units. The weekly demand is 279 units with a standard deviation of 85 units. The cost to place an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.20 per unit. a. Find the reorder point necessary to provide a 95 percent service probability. (Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places.) b. Suppose the production manager is asked to reduce the safety stock of this item by 55 percent. If she does so, what will the new service probability be? (Use Excel's NORM.S.DIST() function to find the correct probability for your computed z value. Round "z" value to 2 decimal places and final answer to 1 decimal place.)arrow_forwardSkinner’s Fish Market buys fresh Boston bluefish daily for $4.10 per pound and sells it for $5.60 per pound. At the end of each business day, any remaining bluefish is sold to a producer of cat food for $1.60 per pound. Daily demand can be approximated by a uniform distribution between 180 and 350 pounds. The optimal order quantity is pounds (round your response to the nearest integer).arrow_forwardDalia, the office manager of a desktop publishing outfit, stocks replacement toner cartridges for laser printers. Demand for cartridges is approximately 30 per year and is quite variable (Le., can be represented using the Poisson distribution). Cartridges cost $100 each and require three weeks to obtain from the vendor. Dalia uses a (Q, r) approach to control stock levels (a). If Dalia wants to restrict replenishment orders to twice per year on average, what batch size Q should she use? If she wants to ensure a service level (i.e., probability of having the cartridge in stock when 2 out of 2 needed) of at least 98 percent, what reorder point r should she use? (Hint: Use Table 2.6.(b). If Dalia is willing to increase the number of replenishment orders per year to six, how do Q and r change? Explain the difference in r.arrow_forward
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