Bryson Carpet Mills produces a variety of different carpets. Changing from production of one carpet to another involves a setup cost of $2,800. Annual demand for this style is 174,000 yards. Bryson Carpet Mills produces carpet 300 days per year. The production process is most efficient when 7,800 yards per day are produced at a cost of $7.50 per yard. Inventory carrying cost is estimated at 20 percent annually. What should be the production order quantity? (Round up your answer to the next whole number.)

2

You are the buyer for your university bookstore. One of the textbooks has a cost to you of $150 and you sell it to students for $300. In this case, however, you cannot salvage any value from copies that do not sell because a new edition is published every semester. Demand for this text averages 130 copies each semester, with a standard deviation of 20 copies. Use Appendix A.

How many should you order each semester? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

3You have a one-time chance to purchase an item for $5. The item can be sold to customers for $39. After one day, the item has no salvage value because it becomes rotten at the end of the day. It will then cost you $23 to properly dispose of any unsold items. You think you can sell 2,300 units in one day, but you also know that the standard deviation of demand for the item is 50 units. Use Appendix A.

How many units should you order? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

4 Michigan State Figurine Inc. (MSF) sells crystal figurines to Spartan fans. MSF buys the figurines from a manufacturer for $26 per unit. They send orders electronically to the manufacturer, costing $35 per order and they experience an average lead time of nine days for each order to arrive from the manufacturer. Their inventory carrying cost is 20 percent. The average daily demand for the figurines is three units per day. They are open for business 250 days a year. The supplier decides to offer a volume discount. They will sell the crystal figurines at $12 per unit for orders of 375 units or more. Answer the following questions:

a. How many units should the firm order each time? Assume there is no uncertainty at all about the demand or the lead time. (Round your answer to the nearest whole number.)

b. How many orders will they place in a year?

c. What is the average inventory?

d. What is the annual ordering cost?

e. What is the annual inventory carrying cost?