Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 10, Problem 2PA
Summary Introduction
To determine: The days-of-supply of inventory.
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Students have asked these similar questions
At Matthews Car Repair, customer demand for a certain brand of motor oil is normally distributed with a mean of 15 gallons and a standard deviation of 6 work-days. To be 95% sure that Compact Car Repair will not run out of oil, we should reorder when motor oil in stock is less than _______ gallons.
a. 24.9
b. 22.6
c. 23.7
d. 20
Give typed full explanation
If a purchase discount is taken:
I. there is a saving in purchase cost.
II. ordering costs are reduced.
III. carrying costs are increased.
IV. there is not necessarily a net saving.
3. (Ch9) A store has collected the following information on one of its products:
Demand = 4,500 units/year
Standard deviation of weekly demand = 12 units
Ordering costs = $40/order
Holding costs = $3/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead-time = 2 weeks
Number of weeks per year = 52 weeks
a. If a firm uses the continuous review system to control the inventory, what would be the order quantity
and reorder point?
b. The firm decided to change to the periodic review system to control the item's inventory. For the most
recent review, an inventory clerk checked the inventory of this item and found 300 units. There were no
scheduled receipts or backorders at the time. How many units should be ordered? (HINT: Use the EOQ
model to derive P, the time between reviews.)
Chapter 10 Solutions
Operations Management
Ch. 10 - It is costly to hold inventory, but inventory can...Ch. 10 - A delivery truck from a food wholesaler has just...Ch. 10 - Prob. 3CQCh. 10 - Prob. 4CQCh. 10 - Prob. 5CQCh. 10 - Prob. 6CQCh. 10 - Prob. 7CQCh. 10 - Prob. 8CQCh. 10 - Prob. 9CQCh. 10 - Prob. 10CQ
Ch. 10 - Prob. 11CQCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - An electronics manufacturer has 25 days-of-supply...Ch. 10 - Prob. 5PACh. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - An online shoe retailers annual cost of holding...Ch. 10 - Prob. 10PACh. 10 - Prob. 11PACh. 10 - Prob. 12PACh. 10 - Prob. 13PACh. 10 - Prob. 14PACh. 10 - Prob. 15PACh. 10 - Prob. 16PACh. 10 - A retailer has annual sales of 500,000 and an...Ch. 10 - Prob. 18PACh. 10 - Prob. 19PACh. 10 - Prob. 1CCh. 10 - Prob. 3CCh. 10 - Prob. 4C
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- An integrated circuit manufacturer’s annual cost of holding inventory is 48 percent.What inventory holding cost (in $) does it incur for an item that costs $300 and has aone-month supply of inventory on average?arrow_forwardWhat is the relationship between the average inventory and the in-stock probability?a. The more the inventory, the lower the in-stock probability.b. There isn’t a definitive relationship—more inventory could mean a lower or a higherin-stock probability.c. The more the inventory, the higher the in-stock probability.arrow_forwardSuppose a retailer’s annual inventory turns are 7.5. What are its days-of-supply of inventory? (Assume 365 days per year.)arrow_forward
- Please do not give solution in image format thanku Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 2, 750 rolls. The cost per roll is 500$, and the annual holding cost is 28percent of the cost. Each order costs 45$. Part 2 a. How many rolls should Yellow Press order at a time? Yellow Press should order enter your response here rolls at a time. (Enter your response rounded to the nearest whole number.)arrow_forwardABC classification divides on-hand inventory into three classes, generally based upon a. item quantity. b. unit price. c. the number of units on hand. d. annual demand. e. annual dollar value.arrow_forward21- Which one of the following represent FIFO method of inventory evaluation? a. Old items remain in inventory b. Old merchandise is sold first c. New merchandise is sold first d. Average number of goods are soldarrow_forward
- 5. __________________refers to the benefits of holding some inventory rather than completely depending on the futures market for supply a. Contract yield b. Convenience yield c. Storage benefit d. Holding benefitarrow_forwardThe company uses cooking oil in its business. The usage of cooking oil is normally distributed with an average of 30 gallons per week and a standard deviation of four gallons per week. The manager asked you to help him decide how to reorder cooking oil in order to achieve a service level of 97.5 percent . Lead time is nine days. a) If cooking oil can be ordered as needed, what reorder point should be used? Answer in 2 decimal places.b) If a fixed interval of 20 days is specified, how much safety stock should the company carry. Answer in 2 decimal places.arrow_forward5. Why can it be bad business practice to not maintain adequate inventory? A. Results in high inventory carrying costs B. Results in a long average collection period C. Can result in stockouts and lost business D. Can result in a long average payment period E. None of the above 6. Splodnick Corporation sells 40,000 units of nebulous ambiguities every year. It costs them $100 to order more units, regardless of the order size. It costs Splodnick 63 cents per year to carry each unit. Using the Economic Order Quantity model, what should be Splodnick’s optimal number of units per order? Round your answer to the nearest whole number of units. A. 356 B. 3,563 C. 283 D. 178 E. None of the abovearrow_forward
- Which one of the following represent FIFO method of inventory evaluation? a. Old merchandise is sold first b. Average number of goods are sold c. Old items remain in inventory d. New merchandise is sold firstarrow_forwardABC Inc. orders components for distribution at a monthly demand of 900 units. Holding costs are 15% of the unit cost of $23.75. The ordering cost is $47.35. The company operates 240 days per year a. If the company wishes to effectively procure these components, what would be the optional amount to order? [Select] b.. What is the average inventory? [Select] c. How many order cycles are there per year? [Select] d. What are the total cost of managing the inventory? $ [Select] e. What is the total cost, including the cost of the inventory? [Select ] f. What is ABC Inc. decided to order 600 components, what impact would it have on holding costs? [Select] >arrow_forward11. Through its online accessory store, Gateway sells its own products, as well as products made by other companies. One of these products is the WB150 WolfByte laptop computer: Estimated annual demand: Cost: Lead time: Standard deviation of weekly demand: Standard deviation of lead time: Holding cost per unit per year: Ordering cost: Desired service level: 15,376 laptops (50 weeks per year) $640 per laptop 2 weeks 16 laptops 0.3 weeks 40% of item cost $25 per order 95% (z = 1.65) a. (*) What is the economic order quantity for the laptops? Calculate annual ordering costs and holding costs (ignoring safety stock) for the EOQ. b. (**) What is the reorder point for the laptops? How much of the reorder point consists of safety stock? c. (**) Suppose Gateway decides to order 64 laptops at a time. What would its yearly ordering and holding costs (ignoring safety stock) for the monitor be? d. (**) Because computer technologies become obsolete so quickly, Gateway is thinking about raising…arrow_forward
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