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(a)
Interpretation:
The order of size that will minimize S’s costsand the total cost of this order size.
Concept Introduction:
Inventory management is the method of controlling the stocks of the company to protect the company from stocks outs.
(a)
Explanation of Solution
Given information:
It is given that daily demand of the electric energy drink is 25bottles per day, number of working days in the year is
Hence, the order quantity is
(b)
Interpretation:
The number of bottles of electric energy drink using the order size that minimizes S’s total costs.
Concept Introduction:
Inventory management is the method of controlling the stocks of the company to protect the company from stocks outs.
(b)
Explanation of Solution
Given information:
It is given that daily demand of the electric energy drink is 25bottles per day, number of working days in the year is
Calculate the average inventory:
(c)
Interpretation:
The frequency of ordering electric energy drink using the minimum cost order size.
Concept Introduction:
Inventory management is the method of controlling the stocks of the company to protect the company from stocks outs.
(c)
Explanation of Solution
Given information:
It is given that daily demand of the electric energy drink is 25bottles per day, number of working days in the year is
Number of orders are calculated by dividing the annual demand with the order size.
Hence, the number of orders per year is
(d)
Interpretation:
The period in which order for electric energy drink to be placed.
Concept Introduction:
Inventory management is the method of controlling the stocks of the company to protect the company from stocks outs.
(d)
Explanation of Solution
Given information:
It is given that daily demand of the electric energy drink is 25bottles per day, number of working days in the year is
(e)
Interpretation:
The decision to be taken by S, if electric energy drink distributor charge only $0.22 for each bottle.
Concept Introduction:
Inventory management is the method of controlling the stocks of the company to protect the company from stocks outs.
(e)
Explanation of Solution
Given information:
It is given that daily demand of the electric energy drink is 25bottles per day, number of working days in the year is
Hence the order quantity is
The total cost of the firm is less for second condition than the first condition. Thus, the company should buy
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Chapter 10 Solutions
Practical Operations Management
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Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,