OPERATIONS MANAGEMENT
2nd Edition
ISBN: 9781260238877
Author: CACHON
Publisher: RENT MCG
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Textbook Question
Chapter 13, Problem 7CQ
A retailer has two merchandizers, Sue and Bob, who are responsible for setting order quantities for the
- a. Sue because she doesn’t incur the cost of salvaging inventory.
- b. Sue because she must have sold more units than Bob.
- c. Bob because even leftover inventory generates some additional revenue.
- d. Bob because he is probably ordering more than the mean of the demand forecast.
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A retail outlet sells a seasonal product for $10 per unit. The cost of the product is $8 per unit. All units not sold during the regular season for half the retail price in an end-of-season clearance sale. Assume that the demand for the product is uniformly distributed between 200 and 800. a. What is the recommended ordering quantity? b. What is the probability of a stockout using your order quantity in (a)? c. To keep customers happy and returning to the store later, the owner feels that stockouts should be avoided if at all possible. What is your recommended order quantity if the owner is willing to tolerate a 0.15 probability of stockout? d. Using your answer to (c), what is the goodwill cost you are assigning to a stockout?
You are running the supply chain for a grocery store operating across Upstate
Souun Carolina. You operate a central warehouse and have multiple stores. For each of the
following situations determine if it would be best to operate inventory for the product that is
pooled at your central warehouse or determined individually by each retail store. Provide at
least 1 sentence discussing your choice.
(a) The demand for boxes of Nutty Bars at each store during a week is i.i.d. with mean
u = 1000 and standard deviation o =
Nutty Bars are high compared to holding costs for Nutty Bars.
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(b) The demand for Fudge Rounds at each store during a week is i.i.d. with mean u = 200
75. Transhipment costs between the stores for Fudge
and standard deviation o
Rounds are relatively small compared to holding costs.
Little Caesars Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive.
Little Caesars Pizza uses an average of 150 pounds of pepperoni each week, with a standard deviation of 30 pounds. Little Caesars prides itself on offering only the best quality ingredients and a high level of service, so it wants to ensure a 98 percent probability of not stocking out on pepperoni.
Assume that the sales representative just walked in the door and there are currently 500 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order?
What is the standard deviation of demand during the review period and lead-time?
How many pounds of pepperoni would you order?
Chapter 13 Solutions
OPERATIONS MANAGEMENT
Ch. 13 - Which of the following is NOT true about the...Ch. 13 - A newsvendor orders the quantity that maximizes...Ch. 13 - Prob. 3CQCh. 13 - Suppose the newsvendor model describes a firms...Ch. 13 - Prob. 5CQCh. 13 - Prob. 6CQCh. 13 - A retailer has two merchandizers, Sue and Bob, who...Ch. 13 - Prob. 8CQCh. 13 - Which of the following changes in the in-stock...Ch. 13 - Prob. 10CQ
Ch. 13 - Prob. 11CQCh. 13 - Prob. 12CQCh. 13 - Prob. 13CQCh. 13 - Prob. 14CQCh. 13 - Dan McClure owns a thriving independent bookstore...Ch. 13 - Flextrola, Inc., an electronics systems...Ch. 13 - Monsanto sells genetically modified seed to...Ch. 13 - Fashionables is a franchisee of The UnLimited, the...Ch. 13 - Teddy Bower is an outdoor clothing and accessories...Ch. 13 - Prob. 6PACh. 13 - Goop Inc. needs to order a raw material to make a...Ch. 13 - Geoff Gullo owns a small firm that manufactures...Ch. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PA
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