MGT 203 Skill Builder Exercise #4 Student Name ______________. Problem 1: (50 points) An ophthalmologist’s office operates 52 weeks per year. It purchases disposable contact lenses for $11.70 per pair. The following information is available about these lenses. Demand = 90 pairs/week Order cost = $54/order Annual holding cost = 27% of purchasing cost Desired cycle-service level = 80% Lead time = 3 weeks Standard deviation of weekly demand
Premium Inventory Safety stock Reorder point
and holding inventory. This type of model is used when i) Demand is dependent. ii) Compute how much to make at one time. Reorder Point: EOQ tells us about how much to order but not when to order. ROP tells us about when to order. The reorder point occurs when the quantity on hand falls below a threshold value. There are 4 determinants of the reorder point: i) The rate of demand. ii) The lead time. iii) The extent of demand and/or lead variability. The degree of stockout risk
Premium Economic order quantity Arithmetic mean Reorder point
HICKORY HILL SMOKED FOOD COMPANY Background Hickory Hill is a well-established smoked foods company specializing in smoked turkeys and has been selling its products throughout the northwestern part of the continental United States since 1967. Initially owned and operated by a German immigrant family‚ the key to the company’s success lay in a secret smoking process native to Rhineland‚ Germany. By 1998‚ the firm owned 250 retail outlets in addition to 400 franchise arrangements. Though the
Premium Inventory Reorder point Smoking
uncertain lead time is normally distributed with a mean of 187.6 gallons and a standard deviation of 12.4 gallons. The company follows a policy of placing an order when the glue stock falls to a predetermined value called the “reorder point.” Note that if the reorder point is x gallons and the demand during lead time exceeds x gallons‚ the glue would go “stock-out” and the production process would have to
Premium Standard deviation Reorder point Safety stock
is equal to the difference between average monthly usage and the maximum usage in a month. Average monthly usage is 70 tonnes (840/12)‚ and the maximum usage is 80 tonnes. Therefore‚ the safety stock is 10 tonnes (80 – 70). 2 Reorder point: The reorder point is 80 tonnes. This is the maximum amount of the chemical that would be used in a month‚ and this is the time that it takes to receive an order after it is placed. ROP = (inventory used per period of time x order lead time) + safety
Premium Cost Reorder point Economic order quantity
(7%) Note Shipping cost $10 per cwt* or $9 per cwt if order is at least 10 bedroom Regular order 6 bedroom Discount 2% if order is at least 15 bedroom *hundred weight‚ or 100 pounds Analisa The optimal order quantity The reorder point Average weekly demand Total annual cost Holding cost Cost per unit Dimana‚ D = Annual demand S = Ordering cost H = Holding cost = Average weekly demand L = Lead time C = Cost per unit i = % carrying cost Pembelian 6 set Pembelian
Free Economic order quantity Safety stock Reorder point
lead time for gaskets is two weeks we multiply this quantity by 2 and we get a figure of 204. We take a safety stock level of one week as this is the half of the lead time and we add this to the figure of 204 and we get a reorder quantity of 306. This should be the reorder quantity for EG151. This also means that the average stock will be 204/2 that is 102 plus safety stock 102 that is 204 units. the investment in the inventory will be 68% of $12.99 that is $8.83. The cost of carrying this
Premium Time Reorder point Inventory
abruptly and factory operations will be terminated. At this point‚ all capacity and remaining inventory will be useless‚ and thus have no value. Management would like to charge the higher prices that customers would pay for dramatically shorter lead times. However‚ historic lead times often extend into several days‚ so management has been unwilling to quote the shorter lead times. Operations Policies at Littlefield LT uses a Reorder Point / Order Quantity raw material purchase policy. That is‚ raw
Premium Safety stock Reorder point Inventory
Firstly‚ we examined our demand and completed job counts to check our productive capacity and inventory. It demonstrated that we were producing faster than our capacity and market had increasing level. Therefore; we decided to change our reorder quantity and reorder point in order to produce more at the same time and meet the demand. Secondly‚ we analyzed our stations’ efficiency and utilization to optimize our productivity process. So that‚ we demanded more machine for station two to lower our production
Premium Inventory Reorder point Supply and demand
FabQual Ltd. (This case appears in the textbook on pages 463-464 of the second edition and page 464 of the third edition. I have changed the British £ sign to the U.S. $ sign on the monetary data. You can use U.S. $ for all monetary answers.) FabQual Ltd. Manufactures parts and subassemblies for a number of small-volume manufacturers of specialized construction equipment‚ including bulldozers‚ graders‚ and cement mixers. FabQual also manufactures and distributes spare parts. The company has made
Premium Manufacturing Economic order quantity Mathematics