Quiz on Inventory - OM PDF

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Quiz #5 12.20 Arthur Meiners is the production manager of Wheel-Rite, a small producer of metal parts. WheelRite supplies Cal-Tex, a larger assembly company, with 10,000 wheel bearings each year. This order has been stable for some time. Setup cost for Wheel-Rite is $40, and holding cost is $.60 per wheel bearing per year. Wheel-Rite can produce 500 wheel bearings per day. Cal-Tex is a just-in-time manufacturer and requires that 50 bearings be shipped to it each business day. a) What is the optimum production quantity? b) What is the maximum number of wheel bearings that will be in inventory at Wheel-Rite? c) How many production runs of wheel bearings will Wheel-Rite have in a year? d) What is the total setup 1 holding cost for Wheel-Rite? P r od u c t i o nOr d e rQua nt i t y , n oni n s t a n t a n e ou sde l i v e r y : (   a ) Q

2DS 21 0 , 0 0 0 4 0     d 5 0 0 . 6 0 1 H 1  5 0 0 p  

2 1 7 . 2 ,o r1 , 2 1 7u n i t s 1  d I n v e n t o r ymax Q1 1 , 0 9 5 p  ( b) D 1 0 , 0 0 0  8 . 2 2 1 , 2 1 7

(   c )Q (   d )

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I n v e n t o r y D ma x H S Q 2

2 8 . 5 0 3 28 . 8 0 $ 6 5 7 . 3 0 3

=365/8.22=40.4 ….01/05/21>>>>>09/06/21 12.29 Kim Clark has asked you to help him determine the best ordering policy for a new product. The demand for the new product has been forecasted to be about 1,000 units annually. To help you get a handle on the carrying and ordering costs, Kim has given you the list of last year’s costs. He thought that these costs might be appropriate for the new product.

He also told you that these data were compiled for 10,000 inventory items that were carried or held during the year. You have also determined that 200 orders were placed last year. Your job as a new operations management graduate is to help Kim determine the economic order quantity for the new product.

12.43 Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz’s chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per year, and the cost of a stockout is $70 per chair per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

12.48 Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product: lead time is normally distributed with an average of 6 weeks and a standard deviation of 2 weeks. Demand is also a variable and normally distributed with a mean of 200 cigars per week and a standard deviation of 25 cigars. a) For a 90% service level, what is the ROP? b) What is the ROP for a 95% service level? c) Explain what these two service levels mean. Which is preferable? ( a ) Bot hl e a dt i mea ndd e ma nda r ev a r i a b l e s ,s oEqua t i on( 1 21 7)a ppl i e s ,i nwe e ks .Z 1. 28f or9 0% s e r vi c e . ROP ( 200 6 ) 1 . 2 8dLT2 2 2 6 2 5) ( 2 0 0 2) whe r e dLT  (  ( 6625) ( 40, 000 4) 3, 750 160, 000 163, 750405

SoROP 1 , 200 ( 1. 28) ( 405) 1 , 2 00 518 1 , 718c i g a r s

( b) Fo r9 5% s e r vi c el e v e l ,Z=1 . 65 SoROP=( 200×6 )+1. 65( 4 05) 1 , 200+668=1 , 8 68c i g a r s .

( c ) Ah i ghe rs e r vi c el e v e lme a n sal o we rpr oba b i l i t yo fs t o c ki n gout .He nc e ,t h eROPi nc r e a s e sf r om 1 , 7 18t o1, 868wh e nt h es e r vi c el e v e lc ha n g ef r ompa r t( a )t op a r t( b) .

12.53 University of Florida football programs are printed 1 week prior to each home game. Attendance averages 90,000 screaming and loyal Gators fans, of whom two-thirds usually buy the program, following a normal distribution, for $4 each. Unsold programs are sent to a recycling center that pays only 10 cents per program. The standard deviation is 5,000 programs, and the cost to print each program is $1. a) What is the cost of underestimating demand for each program? b) What is the overage cost per program? c) How many programs should be ordered per game? d) What is the stockout risk for this order size?...