Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muffler.Annual demandStandard deviation of daily demandItem costAnnual holding cost5,700 mufflers5 mufflers per working day30 per muffler30% of the item valueUse the above information to determine the best order size and the reorder point.Order Size = 252, R = 47Order Size = 243, R = 40Order Size = 300, R = 46O Order Size = 302, R = 23Ordering costService probabilityLead timeWorking days$ 50 per order90 %2 working days300 per year

Here the inventory is checked continuously (usually using automation systems). When the inventory…

Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muffler. Annual demand 5,700 mufflers Standard deviation of daily demand 5 mufflers per working day Item cost $ 30 per muffler Annual holding cost 30% of the item value Ordering cost Service probability Lead time Working days $ 50 per order 90% 2 working days 300 per year Use the above information to determine the best order size and the reorder point. O Order Size = 252, R = 47 ○ Order Size = 243, R = 40 O Order Size = 300, R = 46 O Order Size = 302, R = 23

Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point system to manage inventory of this standard muffler. Annual demand 5,700 mufflers Standard deviation of daily demand 5 mufflers per working day Item cost $ 30 per muffler Annual holding cost 30% of the item value Ordering cost Service probability Lead time Working days $ 50 per order 90% 2 working days 300 per year Use the above information to determine the best order size and the reorder point. O Order Size = 252, R = 47 ○ Order Size = 243, R = 40 O Order Size = 300, R = 46 O Order Size = 302, R = 23

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 8.00 Standard deviation of weekly demand 25 per week Order cost $ 298.00 Lead time 4 weeks Annual holding cost (%) 29 % of item cost Service probability 98 % Annual demand 28,100 Average demand 562 per week a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.) Optimal order quantity units Reorder point units b. Determine the annual holding and order costs. (Round your answers to 2 decimal places.) Holding cost $ Ordering cost $ c. Assume a price break of $50 per order was offered for purchase quantities of 2,100 or more units per order. If…
It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 × 14 BSW. A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data: Cost per tire $35 each Holding cost 20 percent of tire cost per year Demand 1,000 per year Ordering cost $20 per order Standard deviation of daily demand 3 tires Delivery lead time 4 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 98 percent. Assume the demand occurs 365 days per year. Determine the order quantity. Note: Round your answer to the nearest whole number. Determine the reorder point. Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the…
Suppose that the R&B Beverage Company has a soft drink product that shows a constant annual demand rate of 3,800 cases. A case of the soft drink costs R&B $3. Ordering costs are $20 per order and holding costs are 25% of the value of the inventory. R&B has 250 working days per year, and the lead time is 5 days. Identify the following aspects of the inventory policy. a. economic order quantity (round your answer to the nearest integer.) _____450_______ b. reorder point ______76______ c. cycle time (in days) (round your answer to two decimal places.) ______29.61______ d. total annual cost (in $) (round your answer to two decimal places.) _____?_______ ***I am asking the question with the ? symbol. I have been able to locate the numbers for the first three but I am having issues computing my answers for the last one.
EOQ, reorder point, and safety stock Alexis Company uses 937units of a product per year on a continuous basis. The product has a fixed cost of $44 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.
A pharmacist wants to establish an optimal inventory policy for a new antibiotic that requires refrigeration in storage. The pharmacist expects to sell 6000 packages of this antibiotic at a steady rate during the next year. She plans to place several orders of the same size spaced equally throughout the year. The ordering cost for each delivery is $15, and carrying costs, based on the average number of packages in inventory, amount to $8 per year for one package. Use this information to answer the following questions. a) Let x be the order quantity and r the number of orders placed during the year. Find the inventory cost (ordering cost plus carrying cost) in terms of x and r. b) Find the constraint function. c) Determine the economic order quantity that minimizes the inventory cost and then find the minimum inventory cost. X=__________ C=$___________
An electronics retailer carries a particular cellular telephone with the following characteristics:Average monthly sales = 120 unitsOrdering cost = $25 per orderCarrying cost = 35 percent per yearItem cost = $300 per unitLead time = 4 daysStandard deviation of daily demand = .2 unitWorking days per year = 250a. Determine the EOQ.b. Calculate the reorder point for a 92 percent service level, assuming normally distributed demand.c. Design a Q system for this item.d. What happens to the reorder point when the lead time changes? What happens to the reorder point when the standard deviation of demand changes?
Each year, Y Company purchases 20,000 units of an item that costs $640 per unit. The cost of placing an order is P 480, and the cost to hold the item in inventory for one year is $150. Determine the EOQ. What is the average inventory level, assuming that the minimum inventory level is zero Determine the total annual ordering cost and the total annual holding cost for the item if the EOQ is used.
Order Quantity and Reorder PointDaily demand for a certain product is normally distributed, with a mean of 60 and a standard deviation of 7. The source of supply is reliable and maintains a constant lead time of six days. The cost of placing the order is $10 and annual holding costs are $0.50 per unit. There are no stock-out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over the entire 365 days of the year. Find the order quantity and reorder point to satisfy a 95 percent probability of not stocking out during the lead time.
Palin’s Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to answer the below questions. Annual demand 3,000 mufflers Standard deviation of daily demand 6 mufflers per working day Item cost $30 per muffler Annual holding cost 25% of item value Review period 15 working days Ordering cost $50 per order Service probability 90% Lead time 2 working days Working days 300 per year What is the optimal target level (order-up-to level)? Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the nearest whole number. If the service probability requirement is 95 percent, the optimal target level will: multiple choice Increase Decrease Stay the same
It’s your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data. Cost per tire $55 each Holding cost 15 percent of tire cost per year Demand 1,180 per year Ordering cost $ 36 per order Standard deviation of daily demand 7 tires Delivery lead time 8 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 95 percent. Assume the…
Rafiki Bar uses 10,000 cases of millet beer monthly. One case costs Shs.5,000. Holding cost is 30% of the cost of a case p.a while ordering cost is Shs.100,000 per order. The firm works 360 days in a year while lead time is 6 days. Required: ii. Determine the days between orders and the reorder point iii. Determine the total cost of the inventory policy iv. Suppose actual holding cost turns out to be 15% instead of 30% and the inventory policy above is implemented for a year, determine the cost of prediction error if every other parameter estimate turns out as predicted.