250 days a year and stays busy doing so but management feels they can add another flavor to
their product line and increase their revenue. Which of the following statements is appropriate
for this scenario?
a)
b)

c)
d)
Question
7
2 / 2
points
Use the information in Scenario D.1. How many production runs per year are needed if Jerry
chooses to produce at his economic production lot size (ELS)?
Scenario D.1
Jerry Allison is in charge of production for a small producer of plumbing supplies.
The cricket model has an estimated annual demand of 12,000 units and can be produced at a
production rate of 90 units per day. The company produces (and sells) the cricket 300 days per
year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per
unit per year.
Fewer than or equal to
10 runs
Greater than 10 runs
but fewer than or equal
to 20 runs
Greater than 20 runs
but fewer than or equal
to 30 runs
Greater than 30 runs
Question
8
2 / 2
points
In a noninstantaneous replenishment model, as the daily demand approaches 50% of the daily
production rate:
a)

b)
the length in days of a
production run
increases.
c)
the economic
lot size
increases.
d)
the time between
production runs
decreases.
Question
9
2 / 2
points
Use the information in Scenario D.2. What is the best order quantity?
Scenario D.2 Kyle
store sells K2 skis. The store makes a $200 profit per unit sold during the ski season, but
it should take a $50 loss per unit if sold after the season is over. The following discrete
probability distribution has been estimated for the season’s demand.
Demand (
D
)
Demand Probability
10
0.1
20
0.3
30
0.3
40
0.2
a)
Fewer than or
equal to 20
units
b)

c)
d)
Greater
than 50
units
Question
10
2 / 2
points
Pencil supplier just introduced quantity discounts. The price schedule follows.
Order Quantity
Price per Unit
000–199
$4.00
200–399
$3.00
400 and more
$2.00
XYZ store’s annual demand remains at 500 units and ordering cost at $10 per order. If annual
holding cost is 10 percent of the pencils’ per-unit price, what order quantity should XYZ select to
minimize all costs?
a)
Fewer than or
equal to 150
units
b)
c)

d)
Greater
than 399
units
Question
11
2 / 2
points
Use the information in Scenario D.1. If Jerry chooses to produce the batch size suggested by
the economic production lot size (ELS) model, what is the annual cost?
Scenario D.1
Jerry Allison is in charge of production for a small producer of plumbing supplies.
The cricket model has an estimated annual demand of 12,000 units and can be produced at a
production rate of 90 units per day. The company produces (and sells) the cricket 300 days per
year. Setup cost to produce this model averages $22 and the item has a holding cost of $3 per
unit per year.
a)
Less than or
equal to $900
b)
c)
d)
Greater
than
$1000
Question
12
2 / 2
points
Use the information in Scenario D.1. What is the maximum inventory if Jerry chooses to
produce at the economic production lot size (ELS)?

Scenario D.1
Jerry Allison is in charge of production for a small producer of plumbing supplies.

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- Supply Chain Management