A local bookstore selling textbooks and stationary items. The demand for spiral-binded notebooks at the store...
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A local bookstore selling textbooks and stationary items. The demand for spiral-binded notebooks at the store is constant at 5000 notebooks/year. It purchases the notebooks from a supplier at $1.50 per notebook. Each time the bookstores places an order it incurs an ordering cost of $50. The company estimates that the yearly holding cost of inventory is 18% of the unit purchasing cost. The Bookstore needs your help in determining the optimal ordering policy. a. Determine the Economic Order Quantity, the time between placement of orders and the total annual cost (sum of holding and ordering costs) incurred by the bookstore. b. Determine the reorder point assuming the order lead time is 5 workdays and the bookstore operates 250 days a year. c. Suppose that the supplier is a wholesale seller and requires orders to be placed only in multiples of 500 notebooks. What will be the order quantity to meet this requirement? How much additional total annual cost would the bookstores incur? As a manager at Trader Joe's in Spring Valley, you learn that the store often realizes stockouts for Breakfast Blend Coffee. You suspect there might be a problem with inventory management, thus you decide to gather more data. The demand for Breakfast Blend Coffee turns out to be normally distributed. The mean demand for one week is 120 packages and the standard deviation is 20 packages. Trader Joe's cost for Breakfast Blend coffee is $3.50 per package. The cost of carrying Breakfast Blend coffee in inventory is $0.50 per package per week. In addition, Trader Joe's incurs a cost of $27 for placing an order and it takes 1 week to receive the delivery. (Note: z values corresponding to standard normal probabilities may be calculated using Excel or using the table provided at the end of this assignment) a. How many packages of coffee should Trader Joe's order at a time (assume continuous review policy and Economic Order Quantity)? b. What should be the reorder point if Trader Joe's wants to provide a 95% service level? A local bookstore selling textbooks and stationary items. The demand for spiral-binded notebooks at the store is constant at 5000 notebooks/year. It purchases the notebooks from a supplier at $1.50 per notebook. Each time the bookstores places an order it incurs an ordering cost of $50. The company estimates that the yearly holding cost of inventory is 18% of the unit purchasing cost. The Bookstore needs your help in determining the optimal ordering policy. a. Determine the Economic Order Quantity, the time between placement of orders and the total annual cost (sum of holding and ordering costs) incurred by the bookstore. b. Determine the reorder point assuming the order lead time is 5 workdays and the bookstore operates 250 days a year. c. Suppose that the supplier is a wholesale seller and requires orders to be placed only in multiples of 500 notebooks. What will be the order quantity to meet this requirement? How much additional total annual cost would the bookstores incur? As a manager at Trader Joe's in Spring Valley, you learn that the store often realizes stockouts for Breakfast Blend Coffee. You suspect there might be a problem with inventory management, thus you decide to gather more data. The demand for Breakfast Blend Coffee turns out to be normally distributed. The mean demand for one week is 120 packages and the standard deviation is 20 packages. Trader Joe's cost for Breakfast Blend coffee is $3.50 per package. The cost of carrying Breakfast Blend coffee in inventory is $0.50 per package per week. In addition, Trader Joe's incurs a cost of $27 for placing an order and it takes 1 week to receive the delivery. (Note: z values corresponding to standard normal probabilities may be calculated using Excel or using the table provided at the end of this assignment) a. How many packages of coffee should Trader Joe's order at a time (assume continuous review policy and Economic Order Quantity)? b. What should be the reorder point if Trader Joe's wants to provide a 95% service level?
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Operations Management Creating Value Along the Supply Chain
ISBN: 978-1118301173
1st Canadian Edition
Authors: Roberta S. Russell, Bernard W. Taylor, Ignacio Castillo, Navneet Vidyarthi
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