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Operations Management: Processes And Supply Chains (12th Global Edition) - Does Not Include Mylab Operations Management
12th Edition
ISBN: 9780134890357
Author: Lee J. Krajewski, Manoj K. Malhotra
Publisher: Pearson Global Edition
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Question
Chapter C, Problem 8P
Summary Introduction
Interpretation: The order quantity that minimizes total annual costs is to be calculated.
Concept Introduction: Ordering optimum size (creating no additional or shortage of materials in stock) at minimum ordering cost is EOQ.
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Students have asked these similar questions
B). As an inventory manager, you must decide on the order quantity for an item. Its annual demand is 679 units. Ordering costs are $7 each time an order is placed, and the holding cost is 10% of the unit cost. Your supplier provided the following price schedule.
Quantity
Price per Unit
1 - 100
$5.65
101 - 350
$4.95
351 or more
$4.55
What ordering-quantity policy do you recommend?
Huehn-Brown Products in St. Petersburg offers thefollowing discount schedule for its 4-by-8-foot sheets of quality plywood. Home Sweet Home Company orders plywood from HuehnBrown.Home Sweet Home has an ordering cost of$45. Carryingcost is 20%, and annual demand is 100 sheets. What do you recommend?
X Ltd buys & uses a component for production at 10/piece Annual requirement is 2000
pieces. Carrying cost of inventary is 10% per annum & ordering cost is 40/order. The
purchase manager proposes that a single order to be placed for the entire annual
requirement. If X Ltd order 2000 piece at a time we get a 3% discount. Evaluate this
proposal & make your recommendation
Chapter C Solutions
Operations Management: Processes And Supply Chains (12th Global Edition) - Does Not Include Mylab Operations Management
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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
- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardDescribe the advantages of vendor managed inventory ?arrow_forwardExplain the differences between inventory carrying costs and ordering costs.arrow_forward
- Describe the nature of the costs that affect inventory size ?arrow_forwardA local distributor for a national tire company expects to sell approximately 9,600 steelbelted radial tires of a certain size and tread design next year. Annual carrying cost is $16per tire, and ordering cost is $75. The distributor operates 288 days a year.a. a. What is the EOQ?arrow_forwardDefine each of the following terms: b. Total carrying cost; total ordering cost; total inventory costsarrow_forward
- The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the vendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. The car wash is open 360 days a year. Assume that daily usage is normal, and that it has a standard deviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon. The revised price list (cost per gallon) is shown in the following table: Quantity 1 - 399 400 799 800 + Unit Price $2.00 1.70 1.62 Click here for the Excel Data File a. What order quantity is optimal? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Optimal order quantity ROP b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) gallons…arrow_forwardThe manager of a car wash received a revised price list from the vendor who supplies soap, anda promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now thevendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. Thecar wash is open 360 days a year. Assume that daily usage is normal, and that it has a standarddeviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon.The revised price list (cost per gallon) is shown in the following table.Quantity Unit Price1−399 $2.00400−799 1.70800 + 1.62a. What order quantity is optimal?b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent?arrow_forwardA local distributor for a national tire company expects to sell approximately 200 steel-belted radial tires of a certain size and tread design next year. Annual carrying cost is $20 per tire, and ordering cost is $5. The distributor operates 200 days a year. What is the Total Cost?arrow_forward
- Describe what is carrying cost in inventory management?arrow_forwardDiscuss the major inventory costs that are used in determining EOQ?arrow_forwardWeekly Average Demand 110 Standard deviation of (weekly) demand 30 Setup cost ($) 1400 Lead time (in weeks) 2 Procurement cost ($) 200 Holding cost /unit/week ($) 3 You are given the demand and inventory related information about a grocery store’s product in the table. The store is open for 46 weeks in a year. What is the reorder point if it wants to achieve a service level of 97%? (Do not round your intermediate calculations. Round your final answers to the nearest whole number.arrow_forward
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