A local outdoor vegetable stand has exactly 250 square feet of space to display three vegetables: tomatoes, lettuce, and zucchini. Annual demand for these three vegetables in pounds is 1000, 500, and 600, respectively, and the cost per pound is $3, $1, and $2, respectively. The setup cost for replenishment of vegetables is $10 in each case, and the space consumed by each vegetable is 0.5 square foot per pound for tomatoes, 1 square foot per pound for lettuce and 0.4 square foot per pound for zucchini. The annual interest rate for computing holding costs is 20 percent. What are the optimal order quantities?

A local outdoor vegetable stand has exactly 250 square feet of space to display three vegetables: tomatoes, lettuce, and zucchini. Annual demand for these three vegetables in pounds is 1000, 500, and 600, respectively, and the cost per pound is $3, $1, and $2, respectively. The setup cost for replenishment of vegetables is $10 in each case, and the space consumed by each vegetable is 0.5 square foot per pound for tomatoes, 1 square foot per pound for lettuce and 0.4 square foot per pound for zucchini. The annual interest rate for computing holding costs is 20 percent. What are the optimal order quantities?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

See similar textbooks

Similar questions

Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
Suppose the Motorboat dealership in part (a) above dealing in costly motorboats follows the policy of carrying a few units in stock and ordering for replenishment as soon as a motorboat is sold from the stock. The unit cost of the motorboat is $60,000 and the holding or carrying cost is $5,000 per unit per year. The management of Motorboat dealership believe that the shortage cost due to waiting for the motorboat is $2,000 per unit short per month. The demand is seen to be Poisson distributed with an average rate of 2 units per month and the replenishment lead time can be considered to be exponential with a mean of one month. Considering the system as an M/M/s queuing system, find the optimal stock to be carried which can minimize the sum total of carrying and shortage costs.
A chemical firm produces sodium bisulfatein 100-pound bags. Demand for this product is 20 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100, and storage and handling costs are $5 per ton a year. The firm operates200 days a year. (Note: 1 ton = 2,000 pounds.)a)How many bags per run are optimal?b)What would the average inventory be for this lot size?c)Determine the approximate length of a production run, in days.d)About how many runs per year would there be?e)How much could the company save annually if the setup cost could be reduced to $25 per run?
A chemical firm produces sodium bisulfate in 100-pound bags. Demand for this product is 20 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100, and storage and handling costs are $5 per ton a year. The firm operates 200 days a year. (Note: 1 ton= 2,000 pound) How many tons per run are optimal? What would the average inventory be for this lot size? Determine the approximate length of a production run, in days. How much could the company save annually if the setup cost could be reduced to $25 per run?
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 30 units and is valued at $100 per unit. Inbound shipments from vendor 1 will average 300 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 490 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. a. The average aggregate inventory value of the product if Ruby-Star used vendor 1 exclusively is $39,000. (Enter your response as a whole number.) b. The average aggregate inventory value of the product if Ruby-Star used vendor 2 exclusively is $ (Enter your response as a whole number.)
Suppose a Motorboat dealership is dealing in costly motorboats that follow the policy of carrying a few units in stock and ordering for replenishment as soon as a motorboat is sold from the stock. The unit cost of the motorboat is $60,000 and the holding or carrying cost is $5,000 per unit per year. The management of the Motorboat dealership believes that the shortage cost due to waiting for the motorboat is $2,000 per unit short per month. The demand is seen to be Poison distributed with an average rate of 2 units per month and the replenishment lead time can be considered to be exponential with a mean of one month Considering the system as an M/M/s queuing system, find the optimal stock to be carried which can minimize the sum total of carrying and shortage costs.
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 50 units and is valued at $75 per unit. Inbound shipments from vendor 1 will average 350 units with an average lead time (including ordering delays and transit time) of 2 weeks. Inbound shipments from vendor 2 will average 500 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 2-week supply of inventory as safety stock and no anticipation inventory.a. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 1 exclusively?b. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 2 exclusively?c. How would your analysis change if average weekly demand increased to 100 units per week?
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 30 units and is valued at $60 per unit. Inbound shipments from vendor 1 will average 330 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 450 units with an average lead time of 3 weeks. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. A. the average aggregate inventory value of the product if ruby star used vendor 1 exclusively is $_____ (enter your response as a whole number) B. the average aggregate inventory value of the product if ruby sta used vendor 2 exclusively is $______ (enter your response as a whole number) C. how would your analysis change if average weekly demand increased to 140 units per week? the average aggregate inventory value of the product if ruby star used vendor 1…
Suppose we schedule shipments to our customers so that we expect each shipment to wait for two days in finished goods inventory (in essence we add two days to when we expect to be able to ship). We do this as protection against system variability to ensure a high on-time delivery service. If we ship approximately 2,000 units each day, how many units do we expect to have in finished goods inventory after allowing this extra time? If the items are valued at $4.50 each, what is the expected value of this inventory?
Ruby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 60 units and is valued at $60 per unit. Inbound shipments from vendor 1 will average 370 units with an average lead time (including ordering delays and transit time) of 5 weeks. Inbound shipments from vendor 2 will average 520 units with an average lead time of 1 week. Ruby-Star operates 52 weeks per year; it carries a 5-week supply of inventory as safety stock and no anticipation inventory. a. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 1 exclusively?b. What would be the average aggregate inventory value of this product if Ruby-Star used vendor 2 exclusively?c. How would your analysis change if average weekly demand increased to 100 units per week?
We run a fresh produce stand at farmer’s market where we sell avocados and artichokes. Each morning, a supplier drops off bags of these products. We can buy up to 200 bags of avocados and up to 175 bags of artichokes each morning. We resell the bags to customers throughout the day. The contribution margin of avocados is $15/bag; the contribution margin of artichokes is $20/bag. We sell at least twice as many bags of avocados as we do artichokes. We have found that our normal daily demand is between 140 and 350 total bags what are the constaints
Services differ from goods in that I. A service is a tangible process II. A service is an intangible process III. Services can be stored IV. Services cannot be stored V. Services are perishable and time-dependent Option IV and V Option II and IV Option II, IV, and V Option I and III