Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Question
Chapter 14, Problem 6PA
a)
Summary Introduction
To determine: The average order quantity.
b)
Summary Introduction
To determine: The expected on-hand inventory.
c)
Summary Introduction
To determine: The expected on-order inventory.
d)
Summary Introduction
To determine: The in-stock probability.
e)
Summary Introduction
To determine: The stockout probability.
f)
Summary Introduction
To determine: The order-up-to level.
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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 = $3/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 2 weeks Number of weeks per year = 52 weeks a.
If a firm uses the continuous review system to control the inventory, what would be the order quantity and reorder point?
Green Grass Industries Limited (GGIL) has used a fixed-time period
inventory system that involved taking a complete inventory count of
all items each month. However, increasing labor costs, are forcing
GGIL, to examine alternative ways to reduce the amount of labor
involved in inventory stockrooms, yet without increasing other
costs, such a shortage costs. Table 10 is a random sample of 20
GGIL's items.
Table 10. Annual Usage by Value of a sample of GGIL's Inventory
Item Number Annual Usage ($) Item Number Annual Usage ($)
1
10,600
11
2,750
2
14,000
12
1,400
3
4,000
13
3,200
4
16,000
14
2,500
5
8,100
15
110,000
1,800
16
14,800
7
84,000
17
9,500
8.
890
18
1,700
9
940
19
3,700
10
94,000
20
12,500
a) What would you recommend GGIL to do to cut back its labor
cost? (Illustrate using an ABC plan).
b) Item 18 is critical to continued operations at GGIL.
i. How would you recommend it be classified?
ii. Give the reason(s) for your
answer.
United Airlines has an agreement to buy jet fuel from Exxon. The goal is
to minimize total cost (i.e., ordering cost + holding cost). The annual
demand for fuel is 201,000 barrels. Exxon charges United $3740 to
process each order. United incurs a holding cost of $20 per barrel.
When purchasing using the EOQ (from last question), what is the order cycle
time (days between orders) for United?
Note: round your answer to the nearest 1 decimal place. For example,
answer like 12.3
Answer:
Check
Chapter 14 Solutions
Operations Management
Ch. 14 - Demand in each period follows the same normal...Ch. 14 - Prob. 2CQCh. 14 - For products with slow-moving demandfor example,...Ch. 14 - Prob. 4CQCh. 14 - Prob. 5CQCh. 14 - Prob. 6CQCh. 14 - Prob. 7CQCh. 14 - Prob. 8CQCh. 14 - If the target in-stock probability increases, then...Ch. 14 - Prob. 10CQ
Ch. 14 - Prob. 11CQCh. 14 - Prob. 12CQCh. 14 - Prob. 13CQCh. 14 - Prob. 14CQCh. 14 - Prob. 15CQCh. 14 - Prob. 16CQCh. 14 - Prob. 17CQCh. 14 - Prob. 18CQCh. 14 - Prob. 19CQCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - You are the owner of Hotspices.com, an online...Ch. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 1CCh. 14 - Prob. 2CCh. 14 - Prob. 3CCh. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...Ch. 14 - CASE WARKWORTH FURNITURE1 Warkworth Furniture...
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