You are managing a company that stocks and distributes hardware. Thecompany employs two purchasing agents who receive combined salaries of$90,000. They process 6,000 purchase requests per year. Average inventoryin storage is $600,000, and the total cost of running the warehouse is$200,000. You are told that the company purchases 5,000 hammers per yearat a cost of $5.34 per hammer.a. Using the economic order quantity (EOQ) formula, how many hammersshould be ordered at one time?b. If the hammer vendor stated that it would charge $5.00 per hammer if youordered 200 or more at a time, what should you do?

You are managing a company that stocks and distributes hardware. Thecompany employs two purchasing agents who receive combined salaries of$90,000. They process 6,000 purchase requests per year. Average inventoryin storage is $600,000, and the total cost of running the warehouse is$200,000. You are told that the company purchases 5,000 hammers per yearat a cost of $5.34 per hammer.a. Using the economic order quantity (EOQ) formula, how many hammersshould be ordered at one time?b. If the hammer vendor stated that it would charge $5.00 per hammer if youordered 200 or more at a time, what should you do?

Name: You are managing a company that stocks and distributes hardware. Theco
Uploaded: 2024-03-20T06:57:05.000Z
Channel: Bartleby
Description: You are managing a company that stocks and distributes hardware. Thecompany employs two purchasing agents who receive combined salaries of$90,000. They process 6,000 purchase requests per year. Average inventoryin storage is $600,000, and the total c

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

See similar textbooks

Similar questions

The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. If the order size was 1,000 kilograms of resin, what would be the average inventory level?
I NEED IT TODAY, 1. B&H needs to decide how to manage its inventory of cameras. The demand for cameras at B&H is 200 cameras per week. Each time that B&H places an order for a new shipment of cameras, it must pay $80 in fixed processing fees. A camera costs B&H $60 to purchase. The cost for B&H to hold a camera in its store for one week is $4. Assume that the lead time for the delivery of a camera is 0 weeks.a. Suppose that B&H places orders for cameras in quantities of 50 cameras at a time and places a new order for cameras each time that it runs out. Draw a graph showing the number of cameras that B&H has on-hand in inventory at each point in time up until the time when it places its fourth order. Label the points in time at which B&H places a new order. Assume that B&H places its first order for 50 cameras on day 0.b. Suppose again that B&H places orders for 50 cameras at a time. What will be B&H’s average holding costs per week? What will…
As the Manager of Branson’s Department Store, you are responsible for ensuring that reorder quantities for the various items have been correctly established. You decide to test one item and choose product Z. A continuous review inventory policy has been used, so you examine this as well as other records and come up with the following data: Cost per unit $35 Holding cost 20 percent of unit cost Average daily demand 10 units Ordering cost $30 per order Standard deviation of daily demand 3 units Delivery lead time 4 days Because customers generally do not wait but go elsewhere, you decide on a service probability of 90 percent. Assume that Branson’s Department Store operates 320 days per year. [What is the annual demand (D)? Determine the optimal order quantity, Q*. Determine the reorder point (R) if demand is constant. Determine the reorder point (R) if demand is varies.
2. It is an inventory strategy a company employs to increase efficiency and decrease waste by receiving and producing goods as they are needed in the production process, thereby reducing inventory costs. a.Just In Time Inventory System B.min-Max Inventory System C.Pareto/80-20 inventory rule D.ABC inventory system E.None of the above
A printing company anticipates using 40,000 reams of paper at a uniform rate over the next year. Each time they place an order for X units of reams of paper, it is charged a flat fee of $200. Carrying costs are $4 per unit per year. A. use the formula for Economic Order Quantity to find out how many reams of paper they should purchase in each order. B. how many orders should they place over the year?
You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. You are using a continuous review system to control this inventory. The supply lead time is 4 weeks. Placingan order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year.a. What is the optimal ordering quantity for this item?b. How many units of the item should be maintained as safety stock for 99 percent protection against stockouts during an order cycle?c. If supply lead time can be reduced to 2 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stockout protection?d. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly…
Alpha Products, Inc., is having a problem trying to control inventory. There is insufficient time to devote to all its items equally. The following is a sample of some items stocked, along with the annual usage of each item expressed in dollar volume. ITEM ANNUAL DOLLAR USAGE ITEM ANNUAL DOLLAR USAGE a S 30, 100 k S 1,700 b 27,000 120,000 c 93,000 m 111,000 d 1,400 n 3,000 e 1,800 o 500 f 30,000 p 114, 000 g 1,600 q 2,600 h 2,500 г 28,000 i 3, 200 s 2, 800 j 1,500 t 3, 100 a. Suggest a system for allocating control time? multiple choice ABC analysis Cycle counting b. Specify where each item from the list would be placed.
A store has collected the following information on one of its products:Demand = 4,500 units/year Standard deviation of weekly demand = 12 units Ordering costs = $40/order Holding costs = $3/unit/year Cycle-service level = 90% (z for 90% = 1.28) Lead-time = 2 weeks Number of weeks per year = 52 weeks a. If a firm uses the continuous review system to control the inventory, what would be the order quantity and reorder point?
Suppose the following item is being managed using a fixed-order quantity model with safety stock. Annual Demand = 100,000 units Order quantity = 30,000 units Safety stock = 4000 units What are the average inventory level and inventory turnover for this item?
5. Why can it be bad business practice to not maintain adequate inventory? A. Results in high inventory carrying costs B. Results in a long average collection period C. Can result in stockouts and lost business D. Can result in a long average payment period E. None of the above 6. Splodnick Corporation sells 40,000 units of nebulous ambiguities every year. It costs them $100 to order more units, regardless of the order size. It costs Splodnick 63 cents per year to carry each unit. Using the Economic Order Quantity model, what should be Splodnick’s optimal number of units per order? Round your answer to the nearest whole number of units. A. 356 B. 3,563 C. 283 D. 178 E. None of the above
NEED ALL THREE QUESTIONS Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $9 per unit of average inventory. Every time an order is placed for more item X, it costs $6. a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.) b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places.) c. What is the annual cost for storing item X? (Round your answer to 2 decimal places.)