A local farmer has requested the business 351 class to help him determine the optimal level for production of organic fertilizer for commercial farmers which is created by a blend of pig, cow and horse manure. The farm operates 255 days per year, but due to the natural process can only produce 300 pounds of finished fertilizer per day. The annual demand for fertilizer is 53,550 pounds. The farmer has determined that the cost of an order is $250.00 and the annual holding cost is six hundred dollars per 100 pounds. (round to 2 decimals for calculations) * hint – you need holding cost per pound. Hint – some of these answers can be seen in the problem example and some in the in chapter solution. Determine the following: a. The optimal order size b. The total annual inventory costs c. Number of operating days between orders (time between run starts) d. The number of operating days to fill an order (run length) e. Maximum inventory level f Number of production runs

A local farmer has requested the business 351 class to help him determine the optimal level for production of organic fertilizer for commercial farmers which is created by a blend of pig, cow and horse manure. The farm operates 255 days per year, but due to the natural process can only produce 300 pounds of finished fertilizer per day. The annual demand for fertilizer is 53,550 pounds. The farmer has determined that the cost of an order is $250.00 and the annual holding cost is six hundred dollars per 100 pounds. (round to 2 decimals for calculations) * hint – you need holding cost per pound. Hint – some of these answers can be seen in the problem example and some in the in chapter solution. Determine the following: a. The optimal order size b. The total annual inventory costs c. Number of operating days between orders (time between run starts) d. The number of operating days to fill an order (run length) e. Maximum inventory level f Number of production runs

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Last year, the retailer’s weekly variance of demand was 200 units. The variance of orders was 500, 600, 750, and 1,350 units for the retailer, wholesaler, distributor, and manufacturer, respectively.a) Calculate the bullwhip measure for the retailer.b) Calculate the bullwhip measure for the wholesaler.c) Calculate the bullwhip measure for the distributor.d) Calculate the bullwhip measure for the manufacturer.e) Which firm appears to be contributing the most to the bull-whip effect in this supplychain?
A restaurant serves an average of 623 desert (leche flan) servings every week. The manager places an order of 1,000 servings every time she calls the supplier. Record shows that ordering cost per order is PhP30, and the holding cost per serving per year is PhP5.00. a. What is the current annual inventory costs incurred by the restaurant. b. If EOQ is used, what will be the inventory cost incurred by the restaurant each year? c. What order quantity would you recommend for the restaurant? Why?
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Chris Sandvig Irrigation, Inc., has summarized the price list from four potential suppliers of an underground control valve. See the table below. Annual usage is 1,100 valves; order cost is $10 per order; and annual inventory holding costs are $7.55 per unit. D D Vendor A Quantity 1-14 15-24 25-99 100-199 200-399 400+ Price $35.00 34.75 33.55 32.35 31.15 30.75 Vendor C Vendor D Vendor A D Vendor B Vendor B Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost? Chris Sandvig Irrigation should order units at a time from (enter your response as a whole number). Quantity 1-24 25-99 100-199 200-399 400+ Price $34.75 34.00 32.80 31.60 30.50 MacBook Air O Vendor C Quantity 1-49 50-149 150-299 300+ Price $34.50 33.75 32.50 31.10 Vendor D Quantity 1-149 150-299 300+ Price $34.25 33.00 31.00 Next
Kelly’s Tavern buys Shamrock draft beer by the keg from alocal distributor. The bar has an annual demand of 900 kegs, which it purchases at a price of $60 per keg. The annual car-rying cost is $7.20, and the cost per order is $160. The dis-tributor has offered the bar a reduced price of $52 per barrel if it will order a minimum of 300 barrels. Should the bartake the discount?
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Southern Markets, Inc., is considering the use of ABC analysis to focus on the most critical SKUs in its inventory. Currently, there are approximately 20,000 different SKUs with a total dollar usage of $10,000,000 per year.a. What would you expect to be the number of SKUs and the total annual dollar usage for A items, B items, and C items at Southern Markets, Inc.?350 PART 2 Managing Customer Demandb. The following table provides a random sample of the unit values and annual demands of eight SKUs. Categorize these SKUs as A, B, and C items.SKU Code Unit Value Demand (Units)A104 $2.10 2,500D205 $2.50 30X104 $0.85 350U404 $0.25 250L205 $4.75 20S104…
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1. A local producer of vegetables is deciding how much inventory to have to meet the next week's demand. Vegetable products are perishable with a shelf-life of a week. Based on the historical observations, the company expects the weekly demand to follow a normal distribution with mean 4500 pounds and standard deviation of 400 pounds. The price of the product is $14 per pound in the store, and it costs $6 to produce. If there are any leftovers, the company is required to dispose them safely to avoid any pollution. This process costs $0.5 per pound. Answer the following questions. a) What is the cost of overage per pound? b) What is the cost of underage per pound? c) What is the optimal order quantity?
13.13 The TransCanada Lumber Company and Mill processes 10,000 logs annually, operating 250 days per year. Immediately upon receiving an order, the logging company's supplier begins delivery to the lumber mill at the rate of 60 logs per day. The lumber mill has determined that the ordering cost is $1600 per order, and the cost of carrying logs in inventory before they are processed is $15 per log on an annual basis. Determine the following: a. The optimal order size b. The total inventory cost associated with the optimal order quantity c. The number of operating days between orders d. The number of operating days required to receive an order