Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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3. If the lead time is four days and the daily demand is 25, what is the reorder point?
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- Current decision to buy: Ross White's machine shop uses 200 brackets each month during the course of a year. This usage is relatively constant throughout the year. Currently, these brackets are purchased from a supplier 100 miles away for $16 each and the lead time is 2 days. The holding cost per bracket per year is $1.60 (10% of the unit cost) and the annual ordering cost per order is $18.50. There are 240 working days per year. Possible future decision to make in-house: Ross White is reconsidering his decision of buying the brackets and is considering making the brackets in-house. He has determined the set up costs would be $24.50 in machinist time and lost production time. Forty eight brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor and materials) of producing one bracket would be $14.85. The holding cost would be 10% of the cost. a. What is the EOQ given Ross' current decision to buy the brackets? What is the total…arrow_forwardA regional supermarket is open 360 days a year. Daily use of cash register tapes is 15 rolls. The purchase price of the tape is $ 2 and inventory carrying cost is 60 cents per roll a year. Ordering cost is $ 20 per order. The order replenishment lead time is 7 days. What is the Order Point (re-order point) assuming demand is known and constant?arrow_forward11.7 For an SKU, the standard deviation of demand during the lead time is 150 units, the annual demand is 10,000 units, and the order quantity is 750 units. Management says it will tolerate only one stockout per year. What safety stock should be carried? What is the average inventory? If the lead time is 2 weeks, what is the order point?arrow_forward
- Scenario You have been asked by your boss to calculate the Economic Order Quantity (EOQ) for one of the major sub-components used by your firm. You have been provided the following data: The weekly demand for this part is 125 units *52 weeks The cost of the sub-component is $300. The annual holding cost is 0.5% and the ordering or setup cost is $50. Calculate the EOQ using the data provided abovearrow_forwardGiven the following information for a purchased component, what is the total annual cost for the item? Annual demand = 500,000 Purchase price = $10 per unit Order quantity 100,000 • Order cost = $5 per order • Annual holding cost per unit = = $2 . $2.510,100 O $510,025 $510,250 O $5,100,250 O $5,100,025arrow_forwardsniparrow_forward
- 03) Halifax Souvenir Company currently orders 500 units four times each year. Each order costs $12 and each unit costs $1.20 per year to carry. On average, it takes 5 days to receive an order from the supplier. The company operates 250 days per year. Required: 1. What is the EOQ? 2. Calculate total annual inventory cost under EOQ. 3. What is the current inventory cost? 4. What is the re-order point?arrow_forwardCurrent decision to buy: Ross White's machine shop uses 300 brackets each month during the course of a year. This usage is relatively constant throughout the year. Currently, these brackets are purchased from a supplier 100 miles away for $25 each and the lead time is 2 days. The holding cost per bracket per year is $3.75 (15% of the unit cost) and the annual ordering cost per order is $18.50. There are 240 working days per year. Possible future decision to make in-house: Ross White is reconsidering his decision of buying the brackets and is considering making the brackets in-house. He has determined the set up costs would be $22.50 in machinist time and lost production time. Forty eight brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor and materials) of producing one bracket would be $22.85. The holding cost would be 12% of the cost. What is the EOQ given Ross' current decision to buy the brackets? What is the…arrow_forwardTOPIC : Inventory Systems for Independent Demandarrow_forward
- Develop an EOQ solution and calculate total relevant costs for the data in the preceding table.arrow_forwardplease show work in excel The New Haven Foundation gave a grant to the Affordable Computers Co.(ACC) to manufacture low cost computers for children in developing countries. ACC needs 3000 memory chips per month for use in producing these hardware. The ordering cost is 12 dollars, and holding cost is 0.3 dollars per chip per year. a) What is the economic order quantity for the memory chips? b) Based on your answer to part (a), what would be the time between orders? (Hint: Q/D)arrow_forwardUsing the gross requirements schedule below*, prepare an alternative ordering system that always orders 100 units the week prior to a shortage (a fixed order quantity of 100). What is the cost of this ordering system? D Period 1 2 3 Gross requirements 35 30 40 4 5 6 7 8 9 10 0 10 40 30 0 30 55 *Holding cost = $1/unit/week; setup cost = $100; lead time = 1 week; beginning inventory = 35 units. Prepare a net requirements plan (enter your responses as whole numbers). The holding cost of this ordering system is $ The setup cost of this ordering system is $ The total cost of this ordering system is $ Period Gross requirements On-hand at beginning of period 35 On-hand at end of period Net requirements Order receipt Order release (enter your response as a whole number). (enter your response as a whole number). (enter your response as a whole number). 1 35 2 3 30 40 4 0 7 8 9 10 0 30 55 5 6 10 40 30arrow_forward
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