Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point,without safety stock, is 200 kilos. The carrying cost is $10 per kilo per year, and the cost of a stockout is $70 per kiloper year. Given the following demand probabilities during the lead time, how much safety stock should be carried?Demand During Lead Time (Kilos)0100200300400The optimal quantity of safety stock which minimizes expected total cost isnumber).Probability0.10.10.20.40.2kilos (enter your response as a whole

From the given information, Service level, α = Stock out cost÷Stockout +holding cost…

Answered: Tobacco is shipped from North Carolina…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Suppose that the retailer SnowInc buys ski jackets from the Chinese manufacturerJacketCo. Due to the short selling season and long delivery lead time for this fashiongood, this is a one-time purchase decision. SnowInc estimates the season’s demand forone type of jacket to be normally distributed with mean 500 and standard deviation 100.Retail price for the jacket is $100. If not sold at the end of the season they unload themfor $10 per jacket. The wholesale price JacketCo charges is $30 per jacket and JacketCo’sper unit manufacturing cost is $12. How many jackets should SnowInc order and what arethe two firms’ profits? If both firms were owned by the same company, how would theseanswers change?
Annual demand is 16000 units, cost per order is $75 and carrying cost per unit as a percentage is 10%. The company works 250 weeks a year; the lead-time on all orders placed is 6 working days. Assuming constant lead-time demand, and a unit cost of $45 what is the economic order quantity? What is the reorder point. If lead-time demand shows variability that follows a normal distribution with a mean μ =420 and a standard deviation σ =20, what will the revised reorder point if two stock-outs (shortages) are allowed? What is the company’s reorder point if the probability of a stock-out on any cycle is restricted to 0.05?
Bads, Inc., sells an average of 1,000 food processors each year. Each order for foodprocessors placed by Bads costs $50. The lead time is one month. It costs $10 to hold afood processor in inventory for one year. Annual demand for food processors is normallydistributed, with a standard deviation of 69.28. For each of the following values of SLM1,determine the reorder point: 80%, 90%, 95%, 99%, 99.9%.
Demand for your product averages 20 units per day, with a standard deviation of 4. Your lead time is 5 days. What should your reorder point be, if you want to have a 95% chance of not running out of products during the lead time? With this reorder level, how much safety stock do you have?
Interpretation of the inventory holding period depends on the industry in which a business operates. An increase in inventory days might be explained by which of the following? a) Seasonal variations in demand leading to a dramatic increase in the volume of sales of finished goodsb) Supply problems arising from difficulties in purchasing raw materials from suppliersc) A new policy to reduce the level of inventory to reduce the associated costs of storage and insuranced) A business deliberately building up inventories prior to a large order THERE CAN ONLY ONE OPTION
I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can. Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8. The replenishment lead time is 14 weeks. Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill. There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum. In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)? *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, without safety stock, is 200 kilos. The carrying cost is $10 per kilo per year, and the cost of a stockout is $75 per kilo per year. Given the following demand probabilities during the lead time, how much safety stock should be carried? Probability 0.1 0.1 Demand During Lead Time (Kilos) 100 200 0.2 300 0.4 400 0.2 The optimal quantity of safety stock which minimizes expected total cost is kilos (enter your response as a whole number).
The manager of an auto parts store is reviewing the inventory policy for one of their fastest selling products — car batteries. The store sells an average of 40 car batteries every week. The cost to hold one battery in inventory for a year is $15. The ordering cost per order is estimated at $50. The store operates all 52 weeks in a year.Use the information in Scenario 9.5. If the manager decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost? Group of answer choices greater than $1800 but less than or equal to $2100
A sport clothing store sells a popular baseball team cap and classifies it as an A category item. The cap has a normally distributed monthly demand of 500 units (average). The standard deviation of the monthly demand is 12. The cap costs $10 a unit and sells for $15 a unit. The cost of capital for the store is 8% per year. The shipment against a replenishment order is received after 10 days of placing the order with the supplier. Each shipment from the supplier costs $20 in delivery charges and half an hour of staff’s time for storage. Staff is paid $16 an hour. What is the optimum order quantity and the reorder point for the cap if the store desires a 98% service level during the lead time? (Assume 30 days in a month. You can completely round the answers to the closest integer.)
Electronic village stocks and sells a particular brand of personal computer. It costs the store 60 OMR each time it places an order with the manufacturer for the personal computers. The annual cost of carrying the PCs in inventory is 22 OMR per PC. The store manager estimates that annual demand for the PCs will be 150 units. (i) Determine the optimum order quantity and the total inventory cost. (ii) If the store manager places an order for 30 PCs every time, how much total inventory cost?
Alina Limited is a manufacturer of widgets orders components for use in manufacturing. The estimated demand for the components during the coming year is 15,000. Order costs are $100 per order; carrying costs are $12 per component. Using the economic order quantity model What is Alina Ltd’s optimum order quantity? If the supplier guarantees a three (3) day delivery on any order that is placed, What is the re-order point?
Suppose the demand of a product in a retail store is 800 per year and it occurs at a constant rate. Placement of an order of this product to an outside supplier by the store is 40 Dollar. The super market authority has calculated the inventory holding cost per unit per year as 90 cents. Assuming no occurrence of shortages of the product, find i. the minimal number of orders per year. Explain whether the nearest integer number of orders per year is justified. Please answer this part with the explanation part asked in the question.

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