Linear program 3- weekly demand The weekly demand for a product, which is held in stock is always 90 units. When an order fornew stock is placed, it is delivered almost instantaneously by an ordering cost of 50,000 isincurred. The product costs 3, 000 per unit, and it costs 15 percent of this amount to hold a unitin stock for a year. Currently, orders are placed for 2000 units. There are 50 working weeks in aand lead time is one week.yeara) The MD of the company seeks your expert advice on ways in which to determine the economic orderquantity, optimal order cycle time, re-order level and total annual inventory cost. Advise the MD, pro-viding detailed explanation using your answer. Write your answer in a form of a report to the MD.b)Advise the MD about savings, if any, could be made by changing from current order quantity of GH¢2000 units to the one obtained in (a) above.c) Describe the order policy followed by the firm based on your calculations.d) Explain any two assumptions about the order policy.

Answered: ) The MD of the company seeks your…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A product’s demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-up-to level is 270 and the lead time is 2 weeks. Orders are placed every 2 weeks. What is the expected on-hand inventory? 140 80 31 8
The weekly demand for a product, which is held in stock is always 90 units. When an order for new stock is placed, it is delivered almost instantaneously by an ordering cost of 50,000 is incurred. The product costs 3,000 per unit, and it costs 15 percent of this amount to hold a unit in stock for a year. Currently, orders are placed for 2000 units. There are 50 working weeks in a year and lead time is one week. a) As a management science student, the MD of the company seeks your expert advice on ways in which to determine the economic order quantity, optimal order cycle time, re-order level and total annual inventory cost. Advise the MD, providing detailed explanation using your answer. Write your answer in a form of a report to the MD. b) Advise the MD about savings, if any, could be made by changing from current order quantity of GH¢ 2000 units to the one obtained in (a) above. c. Describe the order policy followed by the firm based on the calculation d. Explain any two…
A hospital must order the drug Porapill from DaisyDrug Company. It costs $500 to place an order and $30 toreview the hospital’s inventory of the drug. Annual demandfor the drug is N(10,000, 640,000), and it costs $5 to holdone unit in inventory for one year. Orders arrive one monthafter being placed. Assume that all shortages are backlogged.a Estimate R and the number of orders per year thatshould be placed.b Using the answer in part (a), determine the optimal(R, S) inventory policy. Assume that the shortage costper unit of the drug is $100.
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 1D2 = 15,080 units/yearOrdering cost 1S2 = $125.00/orderHolding cost 1H2 = $3.00/unit/yearLead time 1L2 = 5 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation of weekly demand of 64 units.a. Calculate the item’s EOQ.b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item.c. Which system requires more safety stock and by how much?
Quantity to OrderDaily demand for a product is 10 units, with a standard deviation of 3 units. The review period is 30 days, and the lead time is 14 days. Management has set a policy of satisfying 98 percent of demand from items in stock. At the beginning of this review period, there are 150 units in inventory.How many units should be ordered?
A store has collected the following information on one of its products:Demand = 4,500 units/year Standard deviation of weekly demand = 12 units Ordering costs = $40/order Holding costs = $3/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 2 weeks Number of weeks per year = 52 weeks a. If a firm uses the continuous review system to control the inventory, what would be the order quantity and reorder point?
A company has an annual demand of 16,000 products. The products cost $2 each. Ordering and transport costs amount to $200 per order. The annual cost of holding one product in stock is estimated to be $1.20 . Assume that the company adopts the EOQ as its order quantity and it has to have half of the EOQ as inventory on hand when an order is placed. How many weeks does it take for an order to be delivered to the company? (1 year = 52 weeks) A) PPE may be credited by 2 million dollarsB) Revaluation OCI may be credited by 3,3 million dollarsC) Accumulated depreciation may be debited by 4 million dollarsD) Accumulated depreciation may be credited by 1,3 million dollarsE) Other (Please Specify)
A company has the demand of 1800 units per year (demand rate is constant), holding costs of $13 per unit and setup costs (ordering cost) of $27 per order. The order lead time is 1 days, and the company operates 245 days every year. To avoid a stockout, they need to place an order at least ______ days before the inventory runs out.
The annual demand for pollock (a type of fish) at Ant Kitchens is 1000 pounds. The per pound cost of Pollock for Ant Kitchens $4.00. Fish are delivered frozen from the supplier three weeks after the order is placed. Each time an order of Pollack is received, Ant incurs $200 in handling costs to store the Pollack for use. Ant Kitchens cost of capital is 20%. Assume 50 weeks in a year. a) If Ant currently orders pollock 4 times per year, what are the inventory ordering and holding costs associated with this policy? b) What is the optimal continuous review ordering policy for pollock at Ant? What is the cost of this policy? How does this answer compare to part a? c) If Ant Kitchens follows the inventory policies above, how long does the company hold the average pound of pollock in inventory in each case? What is the inventory turnover? Interpret these quantities in a sentence.
The weekly demand for a product is 770 units. The standard deviation of dailydemand is 10 units. The firm reviews its inventory every 28 days. Each order for the product arrives 9 days after placement. At the time of review, there are 10 units backorder. If 95 percent of all demand is to be satisfied from items in stock:a) How many units should be the safety stock?b) What’s the product’s inventory status?c) How many units should be ordered for this period?
Item X is a standard item stocked in a company’s inventory of component parts. Each year, the firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of averageinventory. Every time an order is placed for more of item X, it costs $10.a. Whenever item X is ordered, what should the order size be?b. What is the annual cost for ordering item X?c. What is the annual cost for storing item X?
1. Let the demand of a product per year is 7800 units. Its standard deviation is 780 (not variance), and it follows a normal distribution. Let the delivery lead time follows a uniform distribution between 15 to 20 days. Determine the chance of having an inventory cycle with shortage when the reorder point is 700 units. Use the time unit of week. One week is five days. One year is 52 weeks.

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