Demand over the next five months is forecasted as 300, 200, 300, 400, and 500 units, respectively. Unit regular time and overtime production costs are $10 and $15, respectively. Total overtime production capacity is 1000 units for the next five months. Regular time production capacity is 300 units per month. Beginning inventory is 200 units. Holding cost is $5 per unit per month. What is the total cost (in $) over the next five months if the company has to meet the demand with no ending inventory each month? O a. 17,750 Ob. 17,450 Oc. 16,950 Od. 16,750 O e. 16,500
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- Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.Annual demand for a product is 8,840 units; weekly demand is 170 units with a standard deviation of 65 units. The cost of placing an order is $90, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.90 per unit. Suppose the production manager is told to reduce the safety stock of this item by 125 units. If this is done, what will the new service probability be?A manager receives a forecast for next year. Demand is projected to be 570 units for the first half of the year and 930 units for the second half. The monthly holding cost is $2 per unit, and it costs an estimated $55 to process an order.
- Your firm uses a continuous review system and operates 52 weeks per year. One of the Stock-Keeping Units (SKUs) has the following characteristics:Demand = 20000 units/year = 385 units/weekOrdering cost = $40/orderHolding cost = $2/unit/yearService level = 95 percentz=1.65Lead time = 2 weeksDemand is normally distributed, with a standard deviation of weekly demand of 100 units. a)Calculate the item's EOQ. b)Find the safety stock and reorder point that provide a 95 percent service level. c)For these policies, what are the annual costs of (i) holding the cycle inventory and (ii) placing orders?A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost. The restaurant has figured that the most economical order size or EOQ is approx. 409 (rounding up the decimals). Suppose that things have become uncertain and that customer demand is no more constant. Customer demand is now normally distributed with mean being the same as given in the problem description and standard deviation = 30 units per week. The supply source is still very reliable and as a result the lead time is constant. Find out the safety stock needed to achieve 95% customer service level. O 55 65 075 85 None of…Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 24 gallons per week and a standard deviation of 3.5 gallons per week. The new manager desires a service level of 90 percent. Lead time is two days, and the dairy is open seven days a week. (Hint: Work in terms of weeks.)Use Table B and Table B1. a-1. If an ROP model is used, what ROP would be consistent with the desired service level? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) ROP gallons a-2. How many days of supply are on hand at the ROP, assuming average demand? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Days b-1. If a fixed-interval model is used instead of an ROP model, what order size would be needed for the 90 percent service level with an order interval of 7 days and a supply of 8 gallons on hand at the order time? (Do not round intermediate…
- Suppose that the newsvendor faces integer-valued demand and must choose an integer value of y. We make no assumptions about the demand distribution (other than that it is an integer) or about the relationship between h and p. Prove that y* is the smallest integer y such that F(y) ≥ (r − c)/(r − v) where F is the cdf of the demand distribution. (Hint: Consider calculating the cost difference between two consecutive integer values.)Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUS classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are: Demand (D) = 15,080 units/year Ordering cost (S) = $125.00/order Holding cost (H) = $3.00/unit/year Lead time (L) = 5 weeks Cycle service level = 95 percent Demand is normally distributed, with a standard deviation of weekly demand of 64 units. -Calculate the item's EOQ. - Use the EOQ to define the parameters of an appropriate continuous review and periodie review system for this item. -Which system requires more safety stock and by how much? -How do you think each system can affect your procurement procedures/methods?Your firm uses a periodic review system for all SKUS classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUS classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item's current characteristics are: Demand (D) = 15,080 units/year Ordering cost (S) = $125.00/order Holding cost (H) = $3.00/unit/year Lead time (L) = 5 weeks Cycle service level = 95 percent Demand is normally distributed, with a standard deviation of weekly demand of 64 units. 1- How do you think each system can affect your procurement procedures/methods?
- The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?The Rainwater Brewery produces Rainwater Light Beer, which it stores in barrels in its warehouse and supplies to its distributors on demand. The demand for Rainwater is 1,500 barrels of beer per day (365 days per year). The brewery can produce 2,000 barrels of Rainwater per day. It costs $6,500 to set up a production run for Rainwater. Once it is brewed, the beer is stored in a refrigerated warehouse at an annual cost of $50 per barrel. Determine the economic order quantity and the minimum total annual inventory cost.A large corporation maintains a fleet of three 30-passenger corporate jets that provide daily scheduled service between Detroit & several cities that are home to its production facilities. The jets are used strictly for business travel. The executives bood reservations thru a centralized transportation office. Because of the limited number of seats available, the planes almost always fly full. Excess demand for seats is assigned by executive rank within the firm. The executive's budget is charged for the flight at the end of the month. The charge is based on the jet's total operating expenses during the month (to include fuel, pilot's salary & fringes, maintenance, licensing & landing fees, and 1/2 of the annual accounting depreciation) divided by the actual passenger miles logged in the month. This rate per passenger is multiplied by each passenger's mileage flown in the month.A. Describe the formula being used to calculate the cost per passenger mile flown.B. As passenger…