Homework_Ch15

# Homework_Ch15 - Maxine incurs a cost of \$1000 every time...

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Homework – Chapter 15 (Inventory Control) 1. What are the major assumptions underlying the basic EOQ model? 2. What are the major assumptions underlying the Newsvendor model? 3. An automotive repair shop stocks many sizes of tires. One particular size and model is purchased for \$30 and sold for \$45. The manager estimates the cost to order at \$75, including the delivery charge and the paperwork. Using the cost of rent, interest, and utilities, the manager estimates the cost of carrying inventory at approximately 50% per year based on average inventory value. The shop sells approximately 3,000 of these tires per year. Orders are received 2 weeks after placement. a. Determine the optimal number of tires the shop should purchase each time an order is placed, and the time between placement of orders. b. What is the reorder point? 4. Maxine's Mobile Home Co. experiences a yearly demand of 520 units for mobile homes;
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Unformatted text preview: Maxine incurs a cost of \$1000 every time she places a new order with the factory. She estimates her inventory holding costs at \$1,200 per unit per year. Compute a. The optimal EOQ b. The number of orders per year c. The length of the order cycle d. The total annual inventory costs 5. Maxine waits 3 weeks to receive an order. What is the reorder point? What would the reorder point be if the weekly standard deviation in demand were 2 and Maxine wanted to achieve a 95% service level? 6. Kristen freshly bakes cookies each day, selling them for \$0.69 per dozen. Production costs total \$0.49 per dozen, including handling and transportation. At the end of the day, cookies are reduced to \$0.29, and Kristen stays open until all are sold. The mean demand is 2,400 dozen and the standard deviation is 300 dozen. What is the optimal number of cookies to make each day?...
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