Practical Management Science
5th Edition
ISBN: 9781305250901
Author: Wayne L. Winston, S. Christian Albright
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 32P
a)
Summary Introduction
To determine: The number of orders the company should make.
Inventory and supply chain models:
The functions of inventory and supply chain are one of the most important business decision areas for an organization. The first important aspect of these concepts is to have adequate inventory on hand. The second important aspect is to carry a little amount of inventory as possible.
b)
Summary Introduction
To determine: The optimal order quantity.
c)
Summary Introduction
To determine: The price at which the company should order.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A retailer determines that the cost of ordering and storing units of a product can be modelled by C(x)= 3x + 2000 / x, 0 < x < 200. Find the order size that will minimise ordering and storage cost.
XYZ’s Hardware is a small family business in Dubai, UAE. The owners, Abdullah and Omar,must use every square foot of store space as profitably as possible. They have never keptdetailed inventory or sales records. As soon as a shipment of goods arrives, the items areimmediately placed on store shelves. Invoices from suppliers are only kept for tax purposes.When an item is sold, the item number and price are rung up at the cash register. The ownersuse their own judgment in identifying items that need to be reordered.a). How could information systems help Abdullah and Omar run their business?b). What data should these systems capture?
Models of inventory systems frequently consider the relationships among a beginning inventory,a production quantity, a demand or sales, and an ending inventory. For a givenproduction period j, letsj-1 = ending inventory from the previous period (beginning inventory for period j)xj = production quantity in period jdj = demand in period jsj = ending inventory for period ja. Write the mathematical relationship or model that shows ending inventory as a functionof beginning inventory, production, and demand.b. What constraint should be added if production capacity for period j is given by Cj?c. What constraint should be added if inventory requirements for period j mandate anending inventory of at least Ij?
Chapter 12 Solutions
Practical Management Science
Ch. 12.4 - Prob. 1PCh. 12.4 - Prob. 2PCh. 12.4 - Prob. 3PCh. 12.4 - Prob. 4PCh. 12.4 - Prob. 5PCh. 12.4 - Prob. 6PCh. 12.4 - Prob. 7PCh. 12.4 - Prob. 8PCh. 12.4 - Prob. 9PCh. 12.4 - Prob. 10P
Ch. 12.4 - Prob. 11PCh. 12.5 - Prob. 12PCh. 12.5 - Prob. 13PCh. 12.5 - Prob. 14PCh. 12.5 - Prob. 15PCh. 12.5 - Prob. 16PCh. 12.5 - Prob. 17PCh. 12.5 - Prob. 18PCh. 12.5 - Prob. 19PCh. 12.5 - Prob. 20PCh. 12.5 - Prob. 21PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 42PCh. 12 - Prob. 43PCh. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Prob. 53PCh. 12 - Prob. 54PCh. 12 - In terms of K, D, and h, what is the average...Ch. 12 - Prob. 56PCh. 12 - Prob. 57PCh. 12 - Prob. 58PCh. 12 - Prob. 59PCh. 12 - Prob. 60PCh. 12 - Prob. 61PCh. 12 - Prob. 62PCh. 12 - Prob. 63PCh. 12 - Prob. 64PCh. 12 - Prob. 65PCh. 12 - Prob. 66PCh. 12 - Prob. 67PCh. 12 - Prob. 68PCh. 12 - Prob. 69PCh. 12 - Prob. 70PCh. 12 - Prob. 71PCh. 12 - Prob. 1.1CCh. 12 - Prob. 1.2CCh. 12 - Prob. 1.3C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- a supermarket expects to sell 1000 boxes of sugar in a year. each box costs $2 and there is a fixed delivery charge of $20 per order. if it costs $1 to store a box for a year, what is the order size and how many times a year should orders be placed to minimize inventory costs?arrow_forwardA restaurant uses 100 per week or 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost. The restaurant has figured that the most economical order size or EOQ is approx. 409 (rounding up the decimals). Approximately, what is the time between two orders (in terms of weeks) 08 06 04 02 None of the abovearrow_forwardThe following table contains figures on the monthly volume and unit costs for a random sample of 16 items from a list of 2,000 inventory items at a health care facility: Item Unit Cost Usage Item Unit Cost Usage K34 $10 200 F99 20 60 K35 25 600 D45 10 550 K36 36 150 D48 12 110 M10 16 25 D52 15 110 M20 20 80 D57 40 120 Z45 80 200 N08 30 40 F14 20 300 P05 16 500 F95 30 800 P09 10 30 Determine the percentage of items in each category and the annual dollar value for each category for part barrow_forward
- A shoe store orders shoes from the manufacturer and sells them at a mall. Storing shoes at the store costs $8 per shoe pair for a year. When reordering shoes from the manufacturer, there is a fixed cost of $16 per order as well as $4 per shoe pair. The retail store sells 750 shoe pairs each year. Find a function that models the total inventory costs as a function of the number of shoe pairs in each order from the manufacturer.arrow_forwardConsider two products A and B that have identical cost, retail price and demand parameters and the same short selling season. The newsvendor model is used to manage inventory for both products. Product A is to be discontinued at the end of the season this year, and the leftovers will be salvaged at 65% of the cost. Product B will be re-offered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each leftover unit equal to 20% of the product's cost. How do the stocking quantities for these products compare? Multiple Choice Stocking quantity of product A is higher. Stocking quantity of product B is higher. The answer cannot be determined from the data provided. Stocking quantities are equal.arrow_forwardA food processor purchases corn for use in its products. The firm uses 700 pounds of corn per week and purchases corn for $0.45 per pound from a supplier. The cost to hold one pound of corn in inventory for one year is $0.09. Each time the firm orders corn from the supplier, the firm must pay a $48 order processing charge. Assume there are 52 weeks in a year and round your answer to the nearest integer value. What is the optimal order quantity (in pounds)? poundsarrow_forward
- A business introduces e-purchasing and is able to process the same number of orders with lesser buyers. As a result of this: inventory pooling must be initiated inventory holding cost must be reduced purchase lead time should be reduced purchase quantity should be reducedarrow_forwardJoe is selling Christmas trees to pay his college tuition.He purchases trees for $10 each and sells them for $25each. The number of trees he can sell is normally distributedwith a mean of 100 and standard deviation of 30. How manytrees should Joe purchase?arrow_forwardFirewire is a high-end manufacturer of surfboards. A surfboard is sourced at a cost of $80 and sold for $125 to surf shops in its home market (United States). One order is placed at the beginning of the summer season. Currently, Firewire disposes any unsold boards to their outlet store affiliates for $70. It costs $10 to hold a board in inventory for the entire season and ship it to outlet affiliates. Demand for this item is forecasted to be normally distributed with a mean of 4,000 units and a standard deviation of 1750 units. A) Please provide ideal service level and order quantity? Expected profits? Expected overstock to outlets?.... under your preferred policy. B) If Firewire chooses instead of outlets to ship to Australia surf shops, the salvage value would increase to $75 per unit (board) including all associated costs (including the aforementioned holding costs). Would this be a better option?….please show each result as in part A for this alternative scenario to justify your…arrow_forward
- Algro Inc. keeps a wide range of parts and materials on hand for use in its production processes. Management has recently had difficulty managing parts inventory as demand for its finished goods has increased; they frequently run out of some critical parts while having an endless supply of others. They would like to classify their parts inventory according to the ABC approach to better control inventory. The following is a list of parts, along with their annual usage and unit value: Item Annual Unit Item Annual Unit Number Usage Cost Number Usage Cost 1 36 $350 2 510 30 3 50 23 4 300 45 5 18 1900 6 500 8 7 710 4 8 80 26 9 344 28 10 67 440 11 510 2 12 682 35 13 1216 95 50 14 10 3 15 820 1 KARAN2222222222 16 60 $610 17 120 20 18 270 15 19 45 50 20 19 3200 21 910 3 12 4750 23 30 2710 24 24 1800 25 870 105 26 244 30 27 750 15 28 45 110 29 46 160 30 165 25 a. Classify the inventory items according to the ABC approach using the dollar value of annual demand. b. Clearly explain why you…arrow_forwardMonsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Monsanto $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000. Round your answer to 2 digits after the decimal point if it is not an integer. Do NOT use comma in your numeric answers. Use excel for accurate numbers. Don't round until the end. Monsanto’s maximum profit for this seed is $[xa]. The underage cost is $[xb]. The…arrow_forwardNutmeg Inc. uses the LIFO method to account for inventory. During years in whichinventory unit costs are generally rising and in which the company purchases more inventory than it sells to customers, its reported gross profit margin will most likely be:A. lower than it would be if the company used the FIFO method.B. higher than it would be if the company used the FIFO method.C. about the same as it would be if the company used the FIFO method.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.