Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 10, Problem 18P
Summary Introduction
Interpretation: The Average number of cards in shop as inventory is to be calculated.
Concept Introduction: Inventory management is the process of managing the company’s stock so that there are no stock outs. It includes ordering, storing, managing the stock.
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Chapter 10 Solutions
Practical Operations Management
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- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardPM CTC is engaged in selling shoes for the military. Upon checking on PM CTC’s supplier, it takes 8 days in between placing an order and eventually receiving it. On the average, they sell 2000 pairs of shoes per day. Determine PM CTC’s reorder point.arrow_forwardFisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 97,200 units per year, an ordering cost of $4 per order, and carrying costs of $1.50 per unit. What is the economic ordering quantity? How many orders will be placed during the year? What will the average inventory be? What is the total cost of ordering and carrying inventory?arrow_forward
- Your company uses an average of 32 boxes of paper a day and operates 128 days a year. It costs $8 to order and receive a shipment of paper, while storage costs for the paper are $1 a year per box. The total annual cost using an order size that would minimize the sum of annual ordering and carrying costs would be $ (enter your answer as a whole number)arrow_forwardSam's Cat Hotel operates 50 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $12.00 per bag. The following information is available about these bags: > Demand = 95 bags/week > Order cost = $50.00/order > Annual holding cost = 20 percent of cost > Desired cycle-service level = 80 percent > Lead time =5 weeks (30 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 95 bags is incorrect and actual demand averages only 75 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $ higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)arrow_forwardA company is targeting a cycle service level of 25%. What should their reorder point be if they have an average weekly demand of 100, a weekly demand standard deviation of 20, and a lead time of 5 weeks?arrow_forward
- Dunstreet’s Department Store would like to develop an inventory ordering policy with a 95 percent probability of not sticking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. The demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. The standard deviation of demand for the sheets is 5 per day. There are currently 150 sheets on-hand.How many sheets should you order?arrow_forwardSam's Pet Hotel operates 52 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: ≻Demand=75 bags/week ≻Order cost=$55.00/order ≻Annual holding cost=25 percent of cost ≻Desired cycle-service level=80 percent ≻Lead time=4 weeks (24 working days) ≻Standard deviation of weekly demand=15 bags ≻Current on-hand inventory is 320 bags, with no open orders or backorders. Part 2 a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $enter your response here higher owing to the error in EOQ. (Enter your response rounded to two decimal places.) a. What is the EOQ? What would the average time between orders (in weeks)? b. What should R be? c. An inventory withdraw…arrow_forwardYour company is streamlining its inventory management systems and has evaluated its inventory purchasing using the Economic Order Quantity (EOQ) model. 75,000 units are used annually. Each unit costs $50. The order cost (per order) is $180 and the carrying cost per item per year is $40. On the basis of this information it is recommended that the EOQ is 822 units per order. Unfortunately the supplier of inventory has a minimum order quantity of 2,000 units. How much more will it cost your company each year in total because of this supplier requirement? Show your workings.arrow_forward
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