Question 1. A large Tampa law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper. Round to the nearest whole number a. What order size would minimize the sum of annual ordering and carrying costs (EOQ)? b. Compute the total annual cost using your order size from part a. c. Except for rounding, are annual ordering and carrying costs always equal at the EOQ? d. The office manager is currently using an order size of 200 boxes. The partners of the firm expect the office to be managed 'in a cost-efficient manner.' Would you recommend that the office manager use the optimal order size instead of 200 boxes? Justify your answer; you will need to determine the total cost difference between the EOQ and 200 boxes/order.

Question 1. A large Tampa law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper. Round to the nearest whole number a. What order size would minimize the sum of annual ordering and carrying costs (EOQ)? b. Compute the total annual cost using your order size from part a. c. Except for rounding, are annual ordering and carrying costs always equal at the EOQ? d. The office manager is currently using an order size of 200 boxes. The partners of the firm expect the office to be managed 'in a cost-efficient manner.' Would you recommend that the office manager use the optimal order size instead of 200 boxes? Justify your answer; you will need to determine the total cost difference between the EOQ and 200 boxes/order.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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QUESTION 1 The sales of Vintage company is 80,000 units per year. The percentage of storage is 20 percent of inventory value. The purchase price is RM20 per unit and the ordering cost of each order is RM1,000. Lead time is 2 weeks. Assume that there are 52 weeks in your calculation. Pleaase Provide Calculation Step Calculate: a) EOQ b) Total Carrying Cost c) Total Ordering Cost d) Total Inventory Cost e) Reorder point f) How many placements of order per year?
Question 5 Safety Stock Model Consider the following information on an inventory management system (one year is 50 weeks, one year is 365 days and 1 week is 7 days): Item Cost:$10 Order Cost:$250 Annual Holding Cost:33% of item cost Average Demand:515 per week Std. Dev. of Demand:125 per week Lead time:14 days a) Ignoring the uncertainty in the demand (i.e. looking only at average values), find the optimal order quantity and the reorder point. b) Consider now the uncertainty. The order quantity remains the same. If the target is to have a 98% annual service level, what should be the ROP? What is the safety stock? c) If the ROP is 1178 units (note that z value has been changed), what is the corresponding annual service level that the firm can provide?
Question2: A company that sells fruit juices sells 1250 cases of fruit juice from cases priced at $50 per case in a month. The business is in city x and juices are ordered from city y. Each order costs the business $250. Storage costs are 20% of a case of fruit juice. According to this;a) the economic order quantity of the enterprise?b) How many days is the time between two orders?c) What is the total inventory cost of the business, including the acquisition costs, in dollars/month?
Question 4 Illustrate Guardian pharmacy’s reorder system to manage their inventory so meet customer expectation. answer guidelines To use order point system and periodic review system. Illustrate its characteristics/advantage in the context of managing inventory in a pharmacy. For example: 1. Order point system - When the quantity of an item on hand in inventory falls to a predetermined level, an order is placed. • The quantity ordered is based on economic order quantity (EOQ). • Order quantity are usually fixed. • The order point is determined by the average demand during the lead time. • If the average demand or the lead time changes, there is no corresponding change in the order point, effectively there is a change in the safety stock. • The interval between replenishment are not constant but vary depending on the actual demand during the order cycle. Usually used for stocks that are longer to sell from the store so to…
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Q3. What is inventory management? Explain in brief 4 functions of inventory management.
QUESTION 2a. A manufacturing company Glass Items Manufacturing Limited (GIM), operating under acontinuous review system, has an average demand of 150 units per week for the item it produces.The standard deviation in weekly demand is 30 units. The lead-time for the item is seven weeks,and it costs the company $70 to process each order. The holding cost for each unit is $30 per year.The company operates 52 weeks per year.A normal distribution table is appended to this assignment. (ii) Use the information in 2 a. above. What is the Reorder Point, if the company has a policy ofmaintaining a 98% cycle-service level? Please answer the question above
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Practice Question: 1. A small local pharmacy, Tacky Pharm sells self-test kits for diabetic patients. These kits cost Tacky $15 each. Customers want to buy the kits at a rate of 240 per week. The pharmacy operates 52 weeks per year. Tacky Pharm estimates ordering cost at $50. Annual holding costs are 20 percent of the unit cost. Lead time is 2 weeks. Using the information given, (1) Calculate the economic order quantity. (2) Calculate the total annual costs using the EOQ. (3) Determine the reorder point.
Question 1 The Jelly Bean operation holds an inventory of food colouring which used to colour the jelly beans. The jelly bean operation is interested in calculating the optimal ordering strategy for food colouring. Suppose the annual forecast for the necessary food colouring during a normal year of operation is 13491 litres per year. Furthermore, suppose the holding cost per litre of paint is $11.4 and every time the jelly bean operation issues an order to their supplier, a charge of $451 is added to the invoice as an ordering cost. The supplier charges $5.63 per litre of food colouring. Using the Economic Order Quantity formula, what is the optimal order size that minimises total cost (in Litres of food colouring per order)? a. 1265 litres b. 736 litres c. 1067446 litres d. 26 litres e. 1033 litres Question 2 Using the Economic Order Quantity formula and the data provided above, how many orders will have to be made in a single year? The choices below are all rounded to the nearest…
Question 30 Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2,000 bags of fertilizer a year. Store A's annual holding costs are 30%. If Store A's order quantity is 20 cases, what is its average inventory level? Group of answer choices 10 40 25 20