Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She has collected the following information: Annual demand: 1000 phones • Phone cost: $1,214 each • Phone RRP: $1,349 each • Net weight: 163 g each • Tare weight: 277 g each • Annual inventory holding cost: 15% • Cost per order to replenish inventory: $75 • Annual in-transit holding cost: 10% • Freight rate: $8.10 per kg • Time to process order for freight: 1 days • Freight transit time: 3 days Solve this problem using a non-linear programming (NLP) model to determine the followings: a. Economic order quantity for the phone in units and in kg b. The total cost for purchasing the phones c. The total cost for ordering d. The total cost for holding the inventory e. The total cost for transportation f. The total cost for holding the phones during transit g. The total cost for this inventory plan h. The number of orders i. Ordering point j. The profit from this inventory plan

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is
determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She
has collected the following information:

Annual demand: 1000 phones
• Phone cost: $1,214 each
• Phone RRP: $1,349 each
• Net weight: 163 g each
• Tare weight: 277 g each
• Annual inventory holding cost: 15%
• Cost per order to replenish inventory: $75
• Annual in-transit holding cost: 10%
• Freight rate: $8.10 per kg
• Time to process order for freight: 1 days
• Freight transit time: 3 days

Solve this problem using a non-linear programming (NLP) model to determine the followings:
a. Economic order quantity for the phone in units and in kg
b. The total cost for purchasing the phones
c. The total cost for ordering
d. The total cost for holding the inventory
e. The total cost for transportation
f. The total cost for holding the phones during transit
g. The total cost for this inventory plan
h. The number of orders
i. Ordering point
j. The profit from this inventory plan

Guidelines: Report Structure
1. Cover page
a. Report's title
b. Names and student IDs
2. Problem formulation (please ensure that all mathematical symbols are correct and consistent); do
this only for an optimisation problem.
a. Define decision variables with a measurement unit (e.g. pallets, kg, or km)
b. Provide an objective function and constraints and clearly show how you formulate them with an
explanation what each equation means
C. Ensure that decision variables and each equation are linked back to the data
3. Problem solving
a. Do not forget to submit the Excel spreadsheet together with the Word report
4. Answer
a. Briefly state what answer that you obtain
5. Presentation
a. Discussion and explanation are succinct
b. There is a link between each section. When the report is read, the reader should not feel jumpy
(i.e. some important information is omitted).
c. Cross-referencing and citations are correct, if any
d. All headings and sections are in place
e. Images or figures are clear
f. The writing is readable. You may use Flesch-Kincaid readability tests to evaluate your report.
Transcribed Image Text:Guidelines: Report Structure 1. Cover page a. Report's title b. Names and student IDs 2. Problem formulation (please ensure that all mathematical symbols are correct and consistent); do this only for an optimisation problem. a. Define decision variables with a measurement unit (e.g. pallets, kg, or km) b. Provide an objective function and constraints and clearly show how you formulate them with an explanation what each equation means C. Ensure that decision variables and each equation are linked back to the data 3. Problem solving a. Do not forget to submit the Excel spreadsheet together with the Word report 4. Answer a. Briefly state what answer that you obtain 5. Presentation a. Discussion and explanation are succinct b. There is a link between each section. When the report is read, the reader should not feel jumpy (i.e. some important information is omitted). c. Cross-referencing and citations are correct, if any d. All headings and sections are in place e. Images or figures are clear f. The writing is readable. You may use Flesch-Kincaid readability tests to evaluate your report.
Assessment 3: Case 2
Details
Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is
determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She
has collected the following information:
Annual demand: 1000 phones
Phone cost: $1,214 each
Phone RRP: $1,349 each
Net weight: 163 g each
Tare weight: 277 g each
Annual inventory holding cost: 15%
Cost per order to replenish inventory: $75
Annual in-transit holding cost: 10%
Freight rate: $8.10 per kg
Time to process order for freight: 1 days
Freight transit time: 3 days
Solve this problem using a non-linear programming (NLP) model to determine the followings:
Economic order quantity for the phone in units and in kg
b. The total cost for purchasing the phones
The total cost for ordering
d. The total cost for holding the inventory
The total cost for transportation
f. The total cost for holding the phones during transit
g. The total cost for this inventory plan
а.
С.
е.
h. The number of orders
i. Ordering point
j. The profit from this inventory plan
Transcribed Image Text:Assessment 3: Case 2 Details Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager is determining a minimum-cost inventory plan for an upcoming phone to be launched in the market. She has collected the following information: Annual demand: 1000 phones Phone cost: $1,214 each Phone RRP: $1,349 each Net weight: 163 g each Tare weight: 277 g each Annual inventory holding cost: 15% Cost per order to replenish inventory: $75 Annual in-transit holding cost: 10% Freight rate: $8.10 per kg Time to process order for freight: 1 days Freight transit time: 3 days Solve this problem using a non-linear programming (NLP) model to determine the followings: Economic order quantity for the phone in units and in kg b. The total cost for purchasing the phones The total cost for ordering d. The total cost for holding the inventory The total cost for transportation f. The total cost for holding the phones during transit g. The total cost for this inventory plan а. С. е. h. The number of orders i. Ordering point j. The profit from this inventory plan
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 From Profit = Total SP – Total CP , what does SP stand for ? 

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