8. 4 The Western Jeans Company purchases denim from Cumberland Textile Mills. The Western Jeans Company uses 35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is $500 per order. It costs Western $0.35 per yard annually to hold a yard of denim in inventory. Determine the optimal number of yards of denim the Western Jeans Company should order, the minimum total annual inventory cost, the optimal number of orders per year, and the optimal time between orders. ( Ans: Q=10000 yards: TC=$3500; No. of orders=3.5 per year; Time between orders= 104.3)
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- 13.4. The Sofaworld Company purchases upholstery material from Barrett Textiles. The company uses 45,000 yards of material per year to make sofas. The cost of ordering material from the textile company is $1500 per order. It costs Sofaworld $0.70 annually to hold a yard of material in inventory. Determine the optimal number of yards of mate- rial Sofaworld should order, the minimum total inventory cost, the opti- mal number of orders per year, and the optimal time between orders.The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?David's Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is pretty steady at 175 per month. The salamis cost Gold $1.85 each. The fixed cost of calling his brother in New York and having the salamis flown in is $200. It takes three weeks to receive an order. Gold's accountant, Irving Wu, recommendsan annual cost of capital of 22 percent, a cost of shelf space of 3 percent of the value of the item, and a cost of 2 percent of the value for taxes and insurance. How many salamis should Gold have on hand when he phones his brother to send another shipment?
- David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is pretty steady at 175 per month. The salamis cost Gold $1.85 each. The fixed cost of calling his brother in New York and having the salamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelf space of 3 percent of the value of the item, and a cost of 2 percent of the value for taxes and insurance.a. How many salamis should Gold have flown in and how often should he order them?b. How many salamis should Gold have on hand when he phones his brother to send another shipment?c. Suppose that the salamis sell for $3 each. Are these salamis a profitable item for Gold? If so, what annual profit can he expect to realize from this item? (Assume that he operates the system optimally.)d. If the salamis…Question 1 For supply item ABC, Andrews Company has been ordering 400 units per week. A new purchasing agent has been hired by the company who wants to start using the economic-order- quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units Lead time, in days Ordering costs Insurance and handling costs Purchase price per unit Return on cash investment 20,800 5 $22 $7 $15 15% RequiredGolden Crust Bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags ayear. Preparing an order and receiving a shipment of flour involves a cost of $10 per order.Annual holding costs are $75 per bag. Once an order for flour is placed, it takes six (6) days toreceive the order from the flour factory. The bakery operates 350 days per year.Calculate the following:(i) Economic Order Quantity(ii) Expected number of orders (Order Frequency)(iii) Average inventory(iv) The annual holding cost(v) The annual ordering cost(vi) The total annual cost of inventory management(vii) Reorder point(viii) If holding costs were to increase by $9 per year, how much would thataffect the minimum total annual cost?
- David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.b. How many salamis should Gold have on hand when he phones his brother tosend another shipment?David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.c. Suppose that the salamis sell for $3 each. Are these salamis a profitable itemfor Gold? If so, what annual profit can he expect to realize from this item?(Assume that he operates the system optimally.)Problem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one Item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire Holding cost Demand Ordering cost Standard deviation of daily demand Delivery lead time Order quantity $ tires 50 each percent of tire cost per year Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year. a. Determine the order quantity. (Round your answer to the nearest whole number.) 15 1,100 per year $ 22 per order 4 tires 5 days
- Cherylene Brown has asked you to help her determine the best ordering policy for a new product. The demand for the new product has been forecasted to be about 1,000 units annually. To help you get a handle on the carrying and ordering costs, Cherylene has given you the list of last year's costs. She thought that these costs might be appropriate for the new product. Cost Factor Taxes for the warehouse Receiving and incoming inspection New product development Acct. dept. costs to pay invoices Inventory insurance Product advertising Spoilage Sending purchasing orders Cost ($) 2,050 1,600 2,500 500 600 800 750 900 Cost Factor Warehouse supplies Research and development Purchasing salaries & wages Warehouse salaries & wages Pilferage of inventory Purchase order supplies Inventory obsolescence Purchasing dept. overhead Cost ($) 300 2,750 30,000 12,800 800 500 300 1,000 She also told you that these data were compiled for 10,000 inventory items that were carried or held during the year. You…University Drug Pharmaceuticals orders its antibiotics every two weeks (14 days) when a salesperson visits from one of the pharmaceutical companies. Tetracycline is one of its most prescribed antibiotics, with average daily demand of 2,000 capsules. The standard deviation of daily demand was derived from examining prescriptions filled over the past three months and was found to be 800 capsules. It takes five days for the order to arrive. University Drug would like to satisfy 99 percent of the prescriptions. The salesperson just arrived, and there are currently 25,000 capsules in stock. How many capsules should be ordered?David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.a. How many salamis should Gold have flown in and how often should he orderthem?