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M3 Written Assignment (Due December 7, 2014)

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Question;M3 W ritten;Assignment (Due December 7, 2014);Submit;your solutions to the following problems. Write your solutions clearly and;neatly.;Show;all your work to get credit!;1. (Chapter 9) A specialty coffeehouse sells;Colombian coffee at a fairly steady rate of 65 pounds per week. The beans are;purchased from a local supplier for $4 per pound. The coffeehouse estimates;that it costs $50 in paperwork and labor to place an order for the coffee, and;the annual holding cost is 20% of the purchasing price. (Use 52 weeks/year);a.;What is the economic order quantity (EOQ) for;Colombian coffee?;b.;What is the optimal number of orders per;year?;c.;What is the optimal interval (in weeks);between the orders?;d.;(B;O NUS 5 points) Assume that the current order policy is to buy the beans every;13 weeks. The manager says that the ordering cost of S = $50 is only a;guess. Therefore, he insists on using the current policy. Find the range of S;for which the EOQ you found in part a) would be preferable (in terms of a lower;total replenishment and carrying costs) to the current policy of buying beans;every 13 weeks.;2. (Chapter 9) A store has collected the;following information on one of its products: Demand = 6,760 units/year;Standard;deviation of weekly demand = 18 units Ordering costs = $40/order;Holding costs =;$2/unit/year Cycle-service level = 90% Lead-time = 3 weeks;Number of weeks per;year = 52 weeks;a.;If the firm uses the;continuous review system to control the inventory, what would be its order;quantity and reorder point?;b.;Assume that the firm decided to change to the;periodic review system to control the;P;is calculated using the EOQ model. Forthe most recent review, an;inventory clerk checked the inventory of this item and found 500 units. There;were no scheduled receipts or backorders at the time. Determine how many units;should the firm order.;3. (Chapter 10) The Marlin Company operates;50 weeks a year, and its cost of goods sold last year was $1,800,000. The firm;carries six items in inventory: three raw materials, two work-in-;average;inventory levels for these items, along with their unit values.;Category;Part Number;Average;Inventory;Value;per Unit;Units;RM-1;1750;$15;Raw;Materials;RM-2;1500;$20;RM-3;1900;$10;Work-in-process;WIP-1;1500;$40;WIP-2;1300;$50;Finished;Goods;FG-1;1000;$120;a.;What is their average aggregate;inventory value?;b.;How many weeks of supply does the;firm have?;c.;What was their inventory turnover;last year?;d.;The turnover;ratio is widely used because it is a common measure that links to the financial;statements of the firm. Discuss the benefits and drawbacks of using this;measure.;4. (Chapter 11);new facility. The search has been narrowed to five locations, all;of which are acceptable to management. The assessment of these sites is being;made on the basis of the five subjective location factors that follow.;Management has agreed to use a five-point scale (Excellent = 5, and Poor = 1);to quantify and compare their subjective opinions about the relative goodness;of the sites. The weight reflects the importance of each factor in the;decision. Calculate the weighted score for each alternative. Which location;would you recommend? Why?;Locations;Factor;W eight;A;B;C;D;E;Labor;climate;30;4;2;4;5;3;Proximity;to markets;25;4;3;5;4;3;Quality;of life;20;1;3;4;3;2;Proximity;to suppliers;15;2;5;2;3;3;Taxes;10;3;4;5;3;5

 

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