Lila Battle has determined that the annual
demand for number 6 screws is 100,000 screws. Lila, who works in her brother’s
hardware store, is in charge of purchasing. She estimates that it costs $10
every time an order is placed. This cost includes her wages, the cost of the
forms used in placing the order, and so on. Furthermore, she estimates that the
cost of carrying one screw in inventory for a year is one-half of 1 cent.
Assume that the demand is constant throughout the year.
Question 1 of 14
To minimize total inventory cost, Lila
should order number 6 screws per order. (Please round to an integer and include
no units.)
Question 2 of 14
Based on the calculation in Question 1,
Lila needs to make orders per year.
Question 3 of 14
Based on the calculation in Question 2,
Lila's total ordering cost is per year. (Please round to a whole dollar.)
Question 4 of 14
Based on the calculation in Question 1,
Lila's average inventory is . (Please round to an integer and include no
units.)
Question 5 of 14
Based on the calculation in Question 4,
Lila's total holding cost is per year. (Please round to a whole dollar.)
Shoe Shine is a local retail shoe store
located on the north side of Centerville. Annual demand for a popular sandal is
500 pairs, and John Dirk, the owner of Shoe Shine, has been in the habit of
ordering 100 pairs at a time. John estimates that the ordering cost is $10 per
order. The cost of the sandal is $5 per pair.
Question 6 of 14
If the carry cost were 10% of the cost,
then the optimal order quantity would be pairs of sandal. (Please round to an
integer and include no units.)
Question 7 of 14
If the optimal order quantity were 100
pairs of sandal, the carry cost should be percent of the cost. (Please round to
a whole percentage.)
Ross White’s machine shop uses 2,500
brackets during the course of a year, and this usage is relatively constant
throughout the year. These brackets are purchased from a supplier 100 miles
away for $15 each, and the lead time is 2 days. The holding cost per bracket
per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is
$18.75. There are 250 working days per year.
Now, Ross White wants to reconsider his
decision of buying the brackets and is considering making the brackets
in-house. He has determined that setup costs would be $25 in machinist time and
lost production time, and 50 brackets could be produced in a day once the
machine has been set up. Ross estimates that the cost (including labor time and
materials) of producing one bracket would be $14.80. The holding cost would be
10% of this cost.
Question 8 of 14
The daily demand rate for Rose White's
machine shop is . (Please round to an integer and include no units.)
Question 9 of 14
The optimal production quantity for Rose
White's machine shop is . (Please round to an integer and include no units.)
Question 10 of 14
Given the optimal production quantity
calculated above, it will take days for Rose White's machine shop to produce
the optimal production quantity. (Please round to one decimal point and include
no units.)
Question 11 of 14
During the time producing the optimal
quantity, (based on your calculation in Questions 8 and 10), there will be
about brackets sold. (Please round it to an integer and include no units.)
Question 12 of 14
If Rose uses the optimal production
quantity calculated above in Question 9, the maximum inventory level would be ,
the average inventory level would be , and the annual holding cost would be .
(Please round to an integer and include no units.)
If Rose uses the optimal production
quantity calculated above in Question 9, there would be about production runs
each year. Hence, the total annual setup cost is and the total annual inventory
cost, including the cost of production is . (Please round to an integer and
include no units.)
Question 14 of 14
If the lead time is one-half day, the
reorder point (ROP) is units. (Please round to an integer and include no
units.)
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