The following is the forecasted demand for Olives Company over the next few months.MonthForecasted DemandJan9025Feb9000Mar9450Apr9830May9630Jun10100Olives Company plans on using a constant production of 9,250 units a month at a $958 perunit cost. The company has an inventory balance of 300 units at the beginning of January.Stockout cost due to loss sale is estimated to be $177 per unit. Monthly inventory holdingcost are $12 per unit. Olives Company can produce an additional 10% of its' regularproduction In overtime at the cost of $80 more per unit.Assume that Olives Company will avoid stockout if possibleUnder this plan how much will will Olives Company spend on inventory holding cost (answerto the nearest whole number)

Based on the information provided, we can calculate the inventory holding cost for Olives Company…

Answered: The following is the forecasted demand…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 69P: The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon...

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.
Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. Ethical decisions that affect a buyers ethical perspective usually involve the organizational environment, cultural environment, personal environment, and industry environment. Analyze this scenario using these four variables.
Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What should Sharon do in this situation?
Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What does the Institute of Supply Management code of ethics say about financial conflicts of interest?
The Bango Toy Company produces several types of toys to seasonal demand. The forecast for the next six months in thousands of dollarsis given below:July Aug. Sept. Oct. Nov. Dec.Forecast $1000 $1500 $2000 $1800 $1500 $1000A regular employee can produce $10,000 worth of toys per month, and the company has 80 regular employees excel at the end of June. Regular-time employees are paid $3800 per month, including benefits. An employee on overtime produces at the same rate as on regular time but is paid at 150 percent of the regular pay. Up to 20 percent overtime can be used in any one month. A worker can be hired for $1000, and it costs $2000 to lay off an employee. Inventory carrying costs are 30 percentper year. The company wishes to end the year with 80 employees. Beginning inventory of toys is $900,000.a. Calculate the cost of a chase strategy.b. Calculate the cost of a level strategy.c. Using the Excel template, simulate several other strategies.d. Determine the effect on the chase…
Khyber Teaching Hospital is considering the purchase of a new ambulance. Thedecision will rest partly on the anticipated mileage to be driven next year. The milesdriven during the last five years are as follows.Year 1 2 3 4 5Mileage 4,000 5,000 4,400 4,800 4,700 Compute the forecast for year 6 using exponential smoothing, an initial forecast foryear 1 of 4,000 miles and α = 0.5
A local semiconductor firm, Superchip, is planning its workforce and productionlevels over the next year. The firm makes a variety of microprocessors and usessales dollars as its aggregate production measure. Based on orders received and sales forecasts provided by the marketing department, the estimate of dollarsales for the next year by month is as follows:Production Predicted DemandMonth Days (in $10,000)January 22 340February 16 380March 21 220April 19 100May 23 490June 20 625July 24 375August 12 310September 19 175October 22 145November 20 120December 16 165Inventory holding costs are based on a 25 percent annual interest charge. It is anticipatedthat there will be 675 workers on the payroll at the end of the current year and inventorieswill amount to $120,000. The firm would like to have at least $100,000 of inventory at theend of December next year. It is estimated that each worker accounts for an average of$60,000 of production per year (assume that one year consists of 250…
Determine the total cost for this plan given the following forecast:Month 1 2 3 4 5 6Forecast 380 400 420 440 460 480Use steady regular output of 400 units per month, use overtime as needed for up to 40 units permonth, and use subcontracting to make up any needed output to match the forecast. Unit costs are:Regular output = $25Overtime = $40Subcontract = $60Average Balance Inventory = $15
The manager of XYZ carpet cleaning company needs a weekly forecast of the number of customers expected next year. The carpet cleaning business is seasonal with the following weekly demand data from the past 2 years Week 1 in Year 1 Demand=102 Week 1 in Year 2 Demand=114 Year 1 Demand=10608 Year 2 Demand=10708 Q8a) Calculate the seasonal factor for Week 1 Q8b) Calculate the demand in the first week in the third year ( knowing that Year 3 Forecasted Demand is11779)
Data collected on the yearly registration for a Six Sigma seminar at the Quality College are shown in the following table: Year Registrations (000) 1 4 2 6 3 4 4 5 5 10 6 8 7 7 8 9 9 12 10 14 11 15 Develop a 4-year moving average to forecast registrations from year 5 to year 12. Estimate demand again for years 5 to 12 within a 4-year weighted moving average in which registrations in the most recent year are given a weight of 3 and 2, and registrations in the other 2 years are each given a weight of 1. Compute the forecasts for each year using exponential smoothing, with an initial forecast for year 5 of 8. Use α = 0.3. Using MAD, which of the three forecasting methods is best? Using MAPE, which of the three forecasting methods is best? Forecast registrations for year 15, using trend projection.

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