Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 8.2, Problem 15P
Summary Introduction
Interpretation: Determine the Least Unit Cost or Part Period balancing heuristic give the optimal solution if the problem Example 6.3 that shows that Silver-Meal heuristic may give a suboptimal solution.
Concept Introduction: Optimal solution is the feasible solution in that the objective function reaches their maximum or minimum value i.e.) more profit or least cost. Optimal solution is defined as objective of the operational management research effort.
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Problem 20-10 (Algo)
You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper
for $0.30 a copy. You sell a copy of San Pedro Times for $1.10. Daily demand is distributed normally with mean = 265 and standard
deviation = 53. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical
value for the given a-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.)
Optimal order quantity
b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.)
Probability
In the single period model, if the excess cost is 7.5 times the shortage cost, the approximate stock - out risk, assuming an optimum service level, is:
a.
88.24 %
b.
66.18 %
c.
10 %
d.
11.76 %
Problem 20-10 (Algo)
You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day’s paper for $0.50 a copy. You sell a copy of San Pedro Times for $1.25. Daily demand is distributed normally with mean = 335 and standard deviation = 67. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.
a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.)
b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.)
Chapter 8 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 8.1 - Prob. 1PCh. 8.1 - Prob. 2PCh. 8.1 - Prob. 3PCh. 8.1 - Prob. 4PCh. 8.1 - Prob. 5PCh. 8.1 - Prob. 6PCh. 8.1 - Prob. 7PCh. 8.1 - Prob. 8PCh. 8.1 - Prob. 9PCh. 8.2 - Prob. 10P
Ch. 8.2 - Prob. 11PCh. 8.2 - Prob. 12PCh. 8.2 - Prob. 13PCh. 8.2 - Prob. 14PCh. 8.2 - Prob. 15PCh. 8.2 - Prob. 16PCh. 8.2 - Prob. 17PCh. 8.2 - Prob. 18PCh. 8.2 - Prob. 19PCh. 8.2 - Prob. 20PCh. 8.2 - Prob. 21PCh. 8.2 - Prob. 22PCh. 8.3 - Prob. 23PCh. 8.3 - Prob. 24PCh. 8.3 - Prob. 25PCh. 8.4 - Prob. 26PCh. 8.4 - Prob. 27PCh. 8.4 - Prob. 28PCh. 8.4 - Prob. 29PCh. 8.5 - Prob. 30PCh. 8.5 - Prob. 31PCh. 8.5 - Prob. 32PCh. 8.5 - Prob. 33PCh. 8.5 - Prob. 34PCh. 8.6 - Prob. 35PCh. 8.6 - Prob. 36PCh. 8.6 - Prob. 37PCh. 8.6 - Prob. 38PCh. 8.6 - Prob. 39PCh. 8.6 - Prob. 40PCh. 8 - Prob. 41APCh. 8 - Prob. 42APCh. 8 - Prob. 43APCh. 8 - Prob. 44APCh. 8 - Prob. 45APCh. 8 - Prob. 46APCh. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51AP
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- Problem 20-10 (Algo) You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper for $0.45 a copy. You sell a copy of San Pedro Times for $1.40. Daily demand is distributed normally with mean = 340 and standard deviation = 68. At the end of each morning, any leftover copies are worthless and they go to a recycle bin. a. How many copies of San Pedro Times should you buy each morning? (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Round your z-value to 2 decimal places and final answer to to 2 decimal places.) 8 Answer is complete but not entirely correct. Optimal order quantity 0.05 b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.) * Answer is complete but not entirely correct. Probability 3 X %arrow_forwardUsing excel. The Metropolitan Bus Company (MBC) purchases diesel fuel from AmericanPetroleum Supply. In addition to the fuel cost, American PetroleumSupply charges MBC $250 per order to cover the expenses of deliveringand transferring the fuel to MBC’s storage tanks. The lead time for anew shipment from American Petroleum is 10 days; the cost of holding agallon of fuel in the storage tanks is $0.04 per month, or $0.48 peryear; and annual fuel usage is 150,000 gallons. MBC buses operate 300days a year.a.What is the optimal order quantity for MBC?b.Howfrequently should MBC order to replenish the gasoline supply?c.TheMBC storage tanks have a capacity of 15,000 gallons. ShouldMBC consider expanding the capacity of its storage tanks?d.What isthe reorder point?arrow_forwardSuppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017. (in millions) 2015 2016 2017 Beginning inventory $ 2,100 $ 2,400 $ 2,300 Ending inventory 2,400 2,300 2,700 Cost of goods sold 18,227 20,071 20,478 Sales revenue 39,145 42,957 44,066 Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.) 2015 2016 2017 Days in inventory daysarrow_forward
- The difference(s) between the basic EOQ model and theproduction order quantity model is(are) that:a) the production order quantity model does not requirethe assumption of known, constant demand.b) the EOQ model does not require the assumption ofnegligible lead time.c) the production order quantity model does not requirethe assumption of instantaneous delivery.d) all of the above.arrow_forwardYour firm uses a periodic review system for all SKUs classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item’s current characteristics are:Demand 1D2 = 15,080 units/yearOrdering cost 1S2 = $125.00/orderHolding cost 1H2 = $3.00/unit/yearLead time 1L2 = 5 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation of weekly demand of 64 units.a. Calculate the item’s EOQ.b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item.c. Which system requires more safety stock and by how much?arrow_forwardSolve the newsperson problem. Probability 0.11 0.08 0.22 0.26 0.12 0.21 Value 1 2 3 4 5 6 Purchase cost c = 27 Selling price p = 35 Salvage value v = 15 What is the optimal order quantity?arrow_forward
- A company is known to have 4 request periods in 1 year. In the first quarter year demand amounted to 750, the 2nd quarter was 900, the third quarter was 1500, and for the fourth quarter it was 900. If the company has an initial inventory of 100, the desired final inventory is 150 units, the cost of normal hours is 100 rupiah/unit, the overtime hour fee is 125 rupiah/unit, the cost of sub-contract hours is 150 rupiah/unit, and lastly the cost of inventory is known to be 20 rupiah per unit per period. Here is the table of normal hours, overtime hours and subcontracts. Period Normal Hours Ovetime Hours Subcontracts 1 700 146 500 2 800 146 500 3 900 146 500 4 500 146 500 Please specify:a. Total cost!b. How much is produced per quarter?c. Analyze Your Answers!arrow_forwardAmong the following multi-period inventory models, which one has the highest probability of stockout? A. Fixed Order Quantity with Safety Stock B. Fixed Time Period Model C. Fixed Order Quantity D. Both Fixed Order Quantity & Fixed Order Quantity with Safety Stockarrow_forwardAnswer bold italicized questions Using excel. The Metropolitan Bus Company (MBC) purchases diesel fuel from AmericanPetroleum Supply. In addition to the fuel cost, American PetroleumSupply charges MBC $250 per order to cover the expenses of deliveringand transferring the fuel to MBC’s storage tanks. The lead time for anew shipment from American Petroleum is 10 days; the cost of holding agallon of fuel in the storage tanks is $0.04 per month, or $0.48 peryear; and annual fuel usage is 150,000 gallons. MBC buses operate 300days a year.a.What is the optimal order quantity for MBC?b.Howfrequently should MBC order to replenish the gasoline supply?c.TheMBC storage tanks have a capacity of 15,000 gallons. ShouldMBC consider expanding the capacity of its storage tanks?d.What isthe reorder point?arrow_forward
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