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QM 670 Inventory Homework
Do problems 2, 4, 7, 8, and 11 on pp. 227229.
1.
Beaver & Thorne Inc. produces expensive decorative jewelry for prestigious upscale
Manhattan department stores.
Due to current capacity constraints, they produce an
equal quantity each period.
For production, they must order glue from either Bagcio
Glue (BG) for $50/container or from IstanbuluoGlue (IG) for $48.
It costs $100 to
place an order with BG and $150 with IG.
The cost of holding inventory is
$.10/dollar per year.
If B&T need 100,000 glue containers/year, which supplier
should they choose?
2.
House of Hillal is a prestigious upscale Manhattan department store (and yes, they do
buy occasionally from B&T).
They must decide the optimal number of Lady
Blumberg scarves to stock.
Each scarf costs $100.00 and sells for $200.00.
The cost
to place an order is $50.00, and it takes a week for the scarves to arrive.
During the
leadtime period, demand is normally distributed with a mean and standard deviation
of 10 and 2 scarves, respectively.
The cost of holding a scarf in inventory is
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 Fall '11
 Dr.Keeney

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