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BUS 440 HW 2 Fall 2014 -Demand for a popular athletic shoe is nearly constant at 1500




1. Demand for a popular athletic shoe is nearly constant at 1500 pairs per week for a regional division of a national retailer. The cost per pair is $48. It costs $82 to place an order, and annual holding costs are charged at 22% of the cost per unit. The lead time is one week.;a. What is the EOQ?;b. What is the reorder point?;c. What is the cycle time?;d. What is the total annual cost?;2. Zip Games purchases blank DVD disks onto which it copies its software for sale through its mail order operation. A disk costs Zip $.28. Processing an order for more disks cost $15. Zip uses 60,000 disks annually, and the company has a 23% cost of capital.;a. Find the optimal order quantity.;b. How many orders are placed annually?;c. How frequently will orders be placed?;3. Kellam Images prints snack food bags on long rolls of plastic film. The plant operates 260 days a year. The daily production rate is 6200 bags, and the daily demand is 3600 bags. The cost to set up the design for printing is $325. The holding cost is estimated at 2 cents per bag per year.;a. What is the recommended production lot size?;b. If there is a five-day lead time to set up the line, what is the recommended reorder point?;c. How long is each production run?;d. What is the TC for the recommended production plan?;e. Sketch the inventory level over time, including the highest inventory level, production run time,?and cycle time.;4. The Tiernan Gallery and Art Museum distributes to its visitors a printed guide to its collections. There are about 17,000 visitors per year. Holding costs for the brochures are 21% and it costs $28 to place an order with the printer. The printer has offered the following discount schedule;Category Order Size Unit Cost. 1 0 - 1499 $2.50. 2 1500 - 2999 $2.20. 3 3000 and over $1.80;How many brochures should be printed at a time?;5. Bank Drugs sells Jami Michelle lipstick. The Jami Michelle Company offers a 6% discount on orders of at least 500 tubes, a 10% discount on orders of at least 1,000 tubes, a 12% discount on orders of at least 1,500 tubes and a 15% discount on orders at least 2,500 tubes.;Bank sells an average of 50 tubes of Jami Michelle lipstick weekly. The normal price paid by Bank drugs is $1 per tube. If it costs Bank $30 to place an order, and Bank's annual holding cost rate is 26%, determine the optimal order policy for Bank Drugs.;6. The Fitness Shop is considering ordering a special model exercise machine. Each unit will cost the shop $425 and it will sell for $750. Any units not sold at the regular price will be sold at the year-end model clearance for $360.;a. Assume that demand follows a normal probability distribution with m = 200 and s =35. What is?the recommended order quantity?;b. Assume that demand is uniformly distributed between 100 and 300. What is the recommended?order quantity?;7. Chez Paul Restaurant orders special Styrofoam "doggy bags" for its customers once a month and lead time is one week. Weekly demand for doggy bags is approximately normally distributed with an average of 120 bags and a standard deviation of 25 bags. Chez Paul wants at most a 3% chance of running out of doggy bags during the replenishment period. What is the reorder point for each of the orders? What is the safety stock in this case?;8. Amazing Bakers sells bread to 40 supermarkets. It costs Amazing $1,250 per day to operate its plant. The profit per loaf of bread sold in the supermarket is $0.25. Any unsold bread is returned to the Amazing Thrift Store to be sold at a loss of $0.13.;a. If sales follow a normal distribution with? = 70,000 and??= 5,000 per day, how many loaves should Amazing bake daily?;b. Amazing is considering a different sales plan for which the profit per loaf of bread sold in the supermarket is $.28 and the loss per loaf bread returned is $.020. If? = 62,000 and??= 4,000 per day, how many loaves should Amazing bake daily?;9. Kelly's Service Station does a large business in tune-ups. Demand has been averaging 220 spark plugs per week. Holding costs are $.015 per plug per week and reorder costs are estimated at $12 per order.?Kelly does not want to be out of stock on more than 2% of his orders. There is a two-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a 7-day work week.;a. What inventory policy do you suggest for Kelly's station?;b. What is the average amount of safety stock for the reorder point in (a)?;c. What are the total variable weekly costs including safety stock costs?;10. The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters in thousands of gallons is as follows;Quarter Forecast Demand (per 1000 gallons);1 400;2 700;3 850;4 650;Management makes the following assumptions;? Each employee works 520 standard hours of regular time each quarter.;? On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).;? Regular-time labor costs $8.00 per hour, overtime labor costs $12.00 per hour.;? Inventory holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.;? Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.;? Management wants a constant work force (no hiring or firing).;? Managers have also decided to always round up the number of employees needed to the next?whole integer (ie 37.2 yields 38 employees).;a. Determine how many employees would be needed to meet the peak required in Quarter 3.;b. Determine the annual inventory holding cost if Academic decides to use a level production rate?of 650 units per quarter.;c. Using a level schedule of 650 units per quarter, what will be the annual employee costs?;d. Using a level schedule of 650 units per quarter, what will be the annual employee costs if only?30 employees are available and overtime is used?;e. If management decides on a chase demand strategy, with production last quarter of 600 units?and a rate change cost of $2.80 per 1000 gallons, determine the total rate change cost.;11. Henderson Furniture sells reproductions of 18th century furniture. For a particular table, the following information is valid.;Month? Demand;Jan 80;Feb 90;Mar 100;Apr 120;May 95;Jun 125;Jul 98;Aug 94;Sep 75;Oct 125;Nov 78;Dec 70;Holding Cost=$200 per table per year;Backorder Cost = $50 per table per year;Hiring Cost=$10 per unit?;Firing Cost=$12 per unit;a. Calculate the costs associated with level production and chase production strategies.;b. Which strategy do you recommend?


Paper#19276 | Written in 18-Jul-2015

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