a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is 8000 units (enter your response as a whole number) b) What is the total cost of this policy? Total annual cost of ordering optimal order size = $ (round your response to the nearest whole number).
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- Rocky Mountain Tire Centre sells 20,000 tires of a particular type per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20. per tire if fewer than 500 tires are ordered, $18. Per tire if more than 500 but fewer than 1,000 tires are ordered and $17. per tire if 1,000 or more tires are ordered. Quantity Unit Price 1-499 $20. 500-999 $18. 1000 & over $17 Based on available information, lead time demand for CD-ROM drives averages 50 units (normally distributed), with a standard deviation of 5 drives. Management wants a 97% service level. What value of Z should be applied? How many drives should be carried as safety stock?Rocky Mountain Tire Center sells 20,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year.The purchase price is $20 per tire if fewer than 500 tires are ordered, $18 per tire if 500 or more-but fewer than 1,000- tires a re ordered, and $17 per tire if I ,000 or more tires areordered.a) How many tires should Rocky Mountain order each time it places an order?b) What is the total cost of this policy?Pingu Company manufactures winter jackets. Setup costs are $2.00. Penguin manufactures 4,000 jackets evenly throughout the year. Using the economic order quantity approach, the optimal production run would be 200 when the cost of carrying one jacket in inventory for one year is 0.40. The given solution is this: 200 = 2*setup cost* Annual Demand / Carrying cost200 = 2*2*4000/ Carrying cost40000 = 16000 / Carrying costCarrying cost = 16000 / 40000Carrying Cost = 0.4 Hence, the cost of carrying one jacket in inventory for one year is 0.4 QUESTION: How did you get the 40,000 (that was divided to 16,000)?
- Hayes electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters as follows: (a) both ordering cost and carrying cost are 10% less that originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.Rocky Mountain Tire Centre sells 20,000 tires of a particular type per year. The ordering cost for each order is $40, and the holding cost is 20% of the purchase price of the tires per year. The purchase price is $20. per tire if fewer than 500 tires are ordered, $18. Per tire if more than 500 but fewer than 1,000 tires are ordered and $17. per tire if 1,000 or more tires are ordered. How many tires should Rocky Mountain order each time it places an order? Quantity Unit Price 1-499 $20. 500-999 $18. 1000 & over $17 Based on available information, lead time demand for CD-ROM drives averages 50 units (normally distributed), with a standard deviation of 5 drives. Management wants a 97% service level. What value of Z should be applied? How many drives should be carried as safety stock?A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)d. Which method resulted in the lowest-cost policy for this problem?
- A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)a. What ordering policy is recommended by the Silver–Meal heuristic?A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)c. What ordering policy is recommended by the least unit cost heuristic?A component used in a manufacturing facility is ordered from an outside supplier.Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks isWeek 1 2 3 4 5 6 7 8 9 10Demand 22 34 32 12 8 44 54 16 76 30The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint:Express h as the holding cost per thousand units.)b. What ordering policy is recommended by the part period balancing heuristic?
- A firm uses the order-up-to model to manage its inventory. It wants to increase its in-stockprobability while decreasing its holding costs (i.e., reducing its average inventory). Which ofthe following actions will help to achieve this goal? (Consider each action independently.)I. Decrease the lead time.II. Increase the order-up-to level.III. Increase the average quantity on order.a. Only Ib. Only IIc. Only IIId. I and IIe. I and IIIf. II and IIIg. Any of them will help (that is I, II, or III).h. None of them will help.JAL Trading is a Hong Kong manufacturer of electroniccomponents. During the course of a year it requires container cargo space on ships leaving Hong Kong bound forthe United States, Mexico, South America, and Canada.The company needs 280,000 cubic feet of cargo space annually. The cost of reserving cargo space is $7000 and thecost of holding cargo space is $0.80/ft3. Determine howmuch storage space the company should optimally order,the total cost, and how many times per year it should placean order to reserve space1. David and Beth Sheba run a health food store. Their top selling item is called Heavenly Kelp. The annual demand for this is 3200 units, and demand is constant throughout the year. The cost of placing an order is $100, while the holding cost per unit per year is $4. How many orders per year should be placed if they wish to minimize their total cost ? If you want to be eligible for partial credit, give an idea as to how you arrived at that number?