The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined. Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

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Answer 1

Question

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

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Students have asked these similar questions

Algro Inc. keeps a wide range of parts and materials on hand for use in its production processes. Management has recently had difficulty managing parts inventory as demand for its finished goods has increased; they frequently run out of some critical parts while having an endless supply of others. They would like to classify their parts inventory according to the ABC approach to better control inventory. The following is a list of parts, along with their annual usage and unit value: Item Annual Unit Item Annual Unit Number Usage Cost Number Usage Cost 1 36 $350 2 510 30 3 50 23 4 300 45 5 18 1900 6 500 8 7 710 4 8 80 26 9 344 28 10 67 440 11 510 2 12 682 35 13 1216 95 50 14 10 3 15 820 1 KARAN2222222222 16 60 $610 17 120 20 18 270 15 19 45 50 20 19 3200 21 910 3 12 4750 23 30 2710 24 24 1800 25 870 105 26 244 30 27 750 15 28 45 110 29 46 160 30 165 25 a. Classify the inventory items according to the ABC approach using the dollar value of annual demand. b. Clearly explain why you…

A perishable dairy product is ordered daily at a particular supermarket. The product, which costs $1.19 per unit, sells for $1.65 per unit. If units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. Assume that daily demand is approximately normally distributed with mean of 150 units and a standard deviation of 30 units. a. What is your recommended daily order quantity for the supermarket? B.How likely the supermarket will experience a stock-out for this dairy product? C.In problems such as these, why would the supplier offer a rebate as high as $1? For example, why not offer a nominal rebate of, say, 25 cents per unit? What happens to the supermarket order quantity as the rebate is reduced?

13 Pam’s demand for hats is normally distributed with mean 500 and standard deviation 100. She sells her hats for $50 each and buys hats for $10 each, and anything she can't sell by the end of the year, the wholesaler will buy for $5 each. How many hats should she order for next year to maximize profit?

Answer 2

Question

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

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Answer 3

Question

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

Answer 6

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

Answer 7

Chapter 5, Problem 28AP

a.

Summary Introduction

Interpretation: The inventory control model for a highly volatile paint thinner having a shelf life of only 3 months and significant variations in demand pattern is to be determined.

Concept Introduction: This is thecase of a perishable product, ordered in a single period; with variations in demand during the single period. This is a case for application of Newsvendor model. Just as a newspaper becomes useless at the end of the day; the thinner will become useless after three months i.e. the ordering period.

Answer 8

a.

Expert Solution

Explanation of Solution

In this model, every period starts with zero initial inventory (the previous left over inventory, if any, is unusable.
The demand, though varying, follows a certain probability distribution.
The model mathematically optimizes the ordering quantity to minimize loss due to unsold items at the end of the single period. The model takes into consideration the cost, the selling price and the resulting loss per unit of the item.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

Answer 13

B.

Summary Introduction

Interpretation:The inventory control model for a white oil-based paint with an almost regular demand is to be identified.

Concept Introduction: A regular EOQ model (economic order quantity) is available for items with a steady demand and price. Economic order quantity balances the ordering costs v/s the inventory holding costs of the inventory items. This is through a mathematical calculation which takes into account the ordering costs, the holding costs, the annual demand etc.

This model is suitable for non-perishable items with relatively stable demand and regular lead time.

Answer 14

B.

Expert Solution

Explanation of Solution

All parameters for calculating the EOQ are available (except the holding rate which is normally known).
EOQ model is the right choice.

Answer 15

B.

Expert Solution

Answer 16

B.

Expert Solution

Answer 17

Expert Solution

Answer 18

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

Answer 19

C.

Summary Introduction

Interpretation:The inventory control model to be used for burnt sienna oil paint, having a variable demand is to be identified.

Concept Introduction: Q, R models with various options are available for items with varying demands. The items are sold during their lifetime.

Answer 20

C.

Expert Solution

Explanation of Solution

Q, R model with a service level of 2 shall be appropriate for this case.
Service level 2 is suggested because, the chances of a stock out look to be remote.

Answer 21

C.

Expert Solution

Answer 22

C.

Expert Solution

Answer 23

Expert Solution

Answer 24

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

Answer 25

D.

Summary Introduction

Interpretation:The inventory control model to be used for synthetic paint brushes with a steady demand with good profit margin is to be identified.

Concept Introduction: In this case of a steady demand item (and most probably a small value item-may be a B item), there is the additional offer of a discount for higher quantity orders.

Answer 26

D.

Expert Solution

Explanation of Solution

A low value item; goes for EOQ model; buy a higher quantity to get discounts.
In fact, since the demand and prices are steady, whole year’s requirement should be procured once.

Answer 27

D.

Expert Solution

Answer 28

D.

Expert Solution

Answer 29

Expert Solution

Answer 30

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.

Answer 31

E.

Summary Introduction

Interpretation:The inventory control model to be used for camel hair brushes with a variable demand, price discounts is to be identified.

Concept Introduction: This again is a low value and low space requiring item andcarrying somewhat extra inventory will not hurt.

Answer 32

E.

Expert Solution

Explanation of Solution

A low value item; place one yearly order with quantity discounts.
Arrange for staggered 4 or 6 monthly dispatches after review.
The item is not perishable. Even if some extra inventory is held, it would hardly affect.