QUIZ+2+2012+ACTUAL+SOLUTIONS

# At the same time the shipping company that sears

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Unformatted text preview: pages IOE 491, Service Operations Management Winter, 2012, IOE Dept, U. Michigan Name Place your name on all pages now! d) A year from now, Sears expects the holding cost of air conditioners to increase to \$3.00 per item per month due to increased insurance costs for the coolants used in the units. At the same time, the shipping company that Sears uses, projects a 10% increase in the fixed order (transport) costs from \$500 to \$550. i. Under these conditions, how often should Sears order air conditions? We convert back to the case of a holding cost of 2 by multiplying both the new holding cost and the new fixed cost by (2/3). This gives a new holding cost per item per period of 2 and a fixed cost of 366.67. This means that we should order 4 times per year. The holding cost is again 1644 and the fixed cost is 1466.67 for a total cost of 3110.67. This needs to be converted back to the case of a holding cost of 3.0 so we multiply by (3.0/2) to get 4666 ii. What will the total cost be under these conditions? 4666. 5 of 8 pages IOE 491, Service Operations Management Winter, 2012, IOE Dept, U. Michigan Name Place your name on all pages now! Problem 3: Cumulative Sylvia’s Seafood Sanctuary (SSS) is a Clam Dinners Probability Probability small exclusive restaurant on the New Requested 0 0.05 0.05 England coast. Sylvia has found that 1 0.1 0.15 the demand for clams at dinner is 2 0.2 0.35 variable as shown in the table to the right. Every morning, she must 3 0.22 0.57 determine how many clam dinners to 4 0.2 0.77 purchase at the local fish market. Each 5 0.1 0.87 dinner order of clams that she 6 0.08 0.95 purchases costs her \$8.00. She is able 7 0.05 1.00 to sell a clam dinner for \$25.00. Any unused clams at the end of...
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