Glorious Gadgets is a retailer of astronomy equipment. They purchase equipment from a supplier and then sell it to customers in their store. The function C(x)=1.5x+12500x^−1+5000 models their total inventory costs (in dollars) as a function of x the lot size for each of their orders from the supplier. The inventory costs include such things as purchasing, processing, shipping, and storing the equipment. A) What lot size should Glorious Gadgets order to minimize their total inventory costs? (NOTE: your answer must be the whole number that corresponds to the lowest cost.) B) What is their minimum total inventory cost?

Glorious Gadgets is a retailer of astronomy equipment. They purchase equipment from a supplier and then sell it to customers in their store. The function C(x)=1.5x+12500x^−1+5000 models their total inventory costs (in dollars) as a function of x the lot size for each of their orders from the supplier. The inventory costs include such things as purchasing, processing, shipping, and storing the equipment. A) What lot size should Glorious Gadgets order to minimize their total inventory costs? (NOTE: your answer must be the whole number that corresponds to the lowest cost.) B) What is their minimum total inventory cost?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
If you are an engineer for an automobile company, the annual requirements for spare parts are 3600 units for the assembly section. The cost of each item is 14.5 RO and the ordering cost is 0.4 RO. Storage cost is 14 % of an item cost. Find a-i) Economic order quantity. a-ii) Optimum cost. b) In the above problem if the supplier is offering a discount of 12 % of the item cost, the storage cost will increase to 15 %. then, Find: b-i) Economic order quantity; ( b-ii) Optimum cost. (
asap!! A manager of an inventory system believes that inventory models are important decision making aids. Even though often using an EOQ policy, the manager never considered a backorder model because of the assumption that backorders were “bad” and should be avoided. However, with upper management’s continued pressure for cost reduction, you have been asked to analyze the economics of a backorder policy for some products that can possibly be backordered. For a specific product with D = 1200 units per year, Co = 160, = 4, and = 25, what is the difference in total annual cost between the EOQ model and the planned shortage or backorder model? If the manager adds constraints that no more than 25% of the units can be backordered and that no customer will have to wait more than 18 days for an order, should the backorder inventory policy be adopted? Assume 300 working days per year.
MAY I ASK FOR THE SOLUTIONS AND ANSWERS OF NOS. 12 to 17 (kindly refer to the table) Thank you! ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but may sometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, the supplier may take 7 days. Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also an opportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order tendays-worth of inventory. (A) Reorder Point 1. What should be the reorder point in boxes? 2. How much would the normal lead time usage be? 3. How much should ABC keep as safety stock? (B) Economic Order Quantity 4. What is the annual demand for the boxes of candles? 5. How much is the…
The Lemma Company manufactures and sells ten products. Managers find ways to reduce the setup and inventory-holding costs by one-half. What effect will this have on the EOQs for the ten products?
Your widget factory requires GWium for polishing. GWium is expensive but worth it and a little goes a long way. Each widget requires 0.1 ounces of GWium to produce. Your supply contract enables you to buy 10,000 ounces of GWium per day for $30/ounce. This is a good deal; the market price is $40/ounce. Total cost of other materials and labor (excluding GWium) is $2.25/widget. You sell to a wholesaler, who buys all widgets you produce at a non-negotiable price of $6.25/widget. Which of the following are true. A. Selling the widgets is a much better course of action than selling the GWium B. Selling the GWium on the open market is a much better course of action than making the widgets O C. You could produce 100,000 widgets per day D. Both A and B E. Both B and C
You are the operations manager of a firm that uses the continuous review (EOQ) system to control your inventory. Suppose the firm operates 52 weeks per year, 365 days, and has the following characteristics for its primary item: Demand = 25,000 units/year %3D Ordering Cost = $30/order Holding Cost = $8/unit/year Lead Time = 2 weeks Standard Deviation in weekly demand = 100 units %3D What is the economic order quantity for this item? Between 400 and 450 units O Between 450 and 500 units Fewer than 400 units O Greater than 500 units
If annual demand = 2500, order cost = $50, annual holding cost rate = 15%, and the purchase price = $120 for orders of less than 10,000 units, or $105 for orders of 10,000 units or more, should you take the discount? Also, what is the minimum total cost? ? a. No--$116,280 b. Yes--$208.477 c. No--$341,263 d. Yes--$302,120
Enter the formulas in the template. The numeric answers are to the right. Quantity Discount Template (Detailed Documentation) Discount Quantity Min. 1 50 90 125 150 200 Price 1,400 1,100 900 895 890 885 Demand = Carrying cost = Ordering cost = EOQ = Average Inventory Order per year = Total Cost = Quantity Ordered $200.00 $190.00 2,500 Total Cost Order Cost Order Cost (D/Q* Ordering Cost) Carry Cost Carry Cost (Q/2* Carrying Cost) Purchase Cost (D* Price) Quantity Discount Template (Detailed Documentation) Discount Quantity Min. 1 50 90 125 150 200 Price 1,400 1,100 900 895 890 885 Demand = Carrying cost = Ordering cost = EOQ = Average Inventory Order per year = Total Cost = Quantity Ordered 72.5 72.5 90.0 125.0 150.0 200.0 $200.00 $190.00 2,500 72.5 36.3 2.8 $13,784.05 Order Cost $6,892 Total Cost $ 293,784.05 $ 233,784.05 $ 194, 105.56 $ 194,875.00 $ $ 198,500.00 $2,500.00 Order Cost (D/Q* Ordering Cost) $6,892.02 $6,892.02 $5,555.56 $4,000.00 195,583.33 $3,333.33 Carry Cost $6,892…
Assume that JAO, Inc., a manufacturer of electronic test equipment, uses 14,400 units of an item annually. Its order cost is P500 per order, and the carrying cost is P10 per unit per year. It requires 10 days to place and receive an order. 1. The ordering costs is 5,696 4,026 6,000 4,8002. The inventory costs is 6,000 12,000 9,600 8,052
Your supplier gives you a quantity discount if you buy at least 500 units at a time, a price of $4.90. Your ordering cost is $30, and the interest rate is 22% of the unit cost. Annual demand is 2,000, so the EOQ is 334. Calculate the total costs (consisting of holding, ordering, and cost of goods), assuming that you buy at least enough to get the quantity discount.
1. A local retailer anticipates an annual demand 15000 units of a product. The retailers] allows shortages for that product, and these shortages are backordered at a rate of 4 OMR per unit backordered. The cost of ordering is 200 OMR, whereas, the annual holding cost is 1OMR per unit. The retailer operates 300 days per year. What is the minimum total inventory cost in OMR? Round-up to the nearest integer?? a. 1960 O b. 2191 C. 1789 d. 1898 e. 1550 O f. None is correct