3. A company which produces a single product has definite orders for this product over the next six months as follows: 1 3 4 5 Month 2 Demand 350 680 475 590 460 6 390 The company ended the previous month (month 0) with an inventory of 200 units, and the previous month production level was 400 units. The company wishes to end this six-month planning period with an inventory of at least 50 units. It costs $3.50 per unit to increase the production level from one month to the next, and $6.00 per unit to decrease it. The cost of holding inventory from one month to the next is $4.80 per unit per month. No shortages are permitted. In each month, the company wants to produce an integer number of units. The company wishes to minimize the sum of production level change costs and inventory costs over the six-month planning horizon.

As with other products, Fisher-Price faces the decision of how many Weather Teddy units to order for the comingholiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, or28,000 units. The wide range of order quantities suggested indicates considerable disagreement concerning themarket potential. The product management team asks you for an analysis of the stock-out probabilities forvarious order quantities, an estimate of the profit potential, and to help make an order quantity recommendation.Fisher-Price expects to sell Weather Teddy for $24 based on a cost of $16 per unit. If inventory remains afterthe holiday season, Fisher-Price will sell all surplus inventory for $5 per unit. After reviewing the sales historyof similar products, Fisher-Price’s senior sales forecaster predicted an expected demand of 20,000 units with a.95 probability that demand would be between 10,000 units and 30,000 units. Question: One of Fisher-Price’s managers felt…

"Nordlund Boat Company has been repairing, refitting, and building custom boats. for over 60 years in the Pacific Northwest." The company is located in Tacoma, Washington. One of the engine's most critical components is the exhaust manifolds. The company purchases this item from the best manufacturers in the world. TJ is the buyer in charge of managing this item. TJ's purchasing agent currently submits an order release for this item every 4 weeks. The company's annual demand is 400 units (2 units per working day). Nordlund's relatively low volume and quality focus, rather than volume focus, means the company cannot take advantage of quantity discounts. The supplier has agreed to deliver this item within 1 week following an order release. For this reason, Nordlund has never had a shortage of exhaust manifolds. The total time between the release date and date of receipt is 1 week or 5 working days. The accounting has generated the following inventory-related costs. Procurement costs…

Algro Inc. keeps a wide range of parts and materials on hand for use in its production processes. Management has recently had difficulty managing parts inventory as demand for its finished goods has increased; they frequently run out of some critical parts while having an endless supply of others. They would like to classify their parts inventory according to the ABC approach to better control inventory. The following is a list of parts, along with their annual usage and unit value: Item Annual Unit Item Annual Unit Number Usage Cost Number Usage Cost 1 36 $350 2 510 30 3 50 23 4 300 45 5 18 1900 6 500 8 7 710 4 8 80 26 9 344 28 10 67 440 11 510 2 12 682 35 13 1216 95 50 14 10 3 15 820 1 KARAN2222222222 16 60 $610 17 120 20 18 270 15 19 45 50 20 19 3200 21 910 3 12 4750 23 30 2710 24 24 1800 25 870 105 26 244 30 27 750 15 28 45 110 29 46 160 30 165 25 a. Classify the inventory items according to the ABC approach using the dollar value of annual demand. b. Clearly explain why you…

LPM Corp. produces and sells two types of frozen burgers, Turkey Burgers and Veggie Burgers. In the most recent month, the firm sold 12,000 Turkey Burgers and 8,000 Veggie Burgers. Turkey Burgers sold for $14.00 per box and variable costs were $7.40 per box. The Veggie Burgers sold for $16.00 per box and variable costs were $8.25 per box. The fixed expenses of the entire company were $41,160. If the sales mix were to shift toward the Turkey Burgers product line with total sales volume remaining constant at 20,000, the overall break-even point for the entire company:

Birka Styles & Co is introducing a new line of beachwear for their retail stores. The manager needs to decide how many lots of the new beachwear to order for their stores. The marketing came up with a payoff table (see below) considering information about the price, projected sales level, and cost of inventory and ordering.    DEMAND Order size Low Medium High 1 lot 12,000 15,000 15,000 2 lots 9,000 25,000 35,000 3 lots 6,000 35,000 60,000 The owner found out that: P(Low demand) = 1/3; P(Med demand) = 1/2; P(High demand) = 1/6. Which of the following decision is NOT true? A)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform a Laplace approach. B)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform the EMV approach. C)The EVPI is $2,000. D)The EVwPI is $31,500.