Operations and Supply Chain Management for the 21st Century

Operations and Supply Chain Management for the 21st Century
ch 6: independent demand inventory
1. The current order quantity for Paul’s Pasta Pin-wheels is 200 boxes. The order cost is $4 per or-der, the holding cost is $0.40 per box per
year, and the annual demand is 500 boxes per year.a. Calculate the annual holding cost plus the annual ordering cost to get the total annual
cost when using an order quantity of 200 boxes.b. Calculate the EOQ and the total annual cost for this order quantity.
p.227 3. Hottenstein, Giffith, and Hult, attorneys at law, do a great deal of printing. The firm uses a single type of printer with annual
demand for print cartridges of 480 per year. The order cost is $15 per order, and the carrying cost is 20 percent per cartridge per year of
the purchase cost of $35 per cartridge. a. How many print cartridges should the firm order at one time?b. What is the time between orders?
p.228 4. Burgerama requires all employees who handle food to wear latex gloves for sanitary reasons. The annual demand for gloves is 250 boxes
of 200 per year. The order cost is $11 per order, and the car-rying cost is 25 percent per box per year of the purchase cost of $20 per box.
a. How many boxes of gloves should Burgerama order at one time?b. What is the time between orders?c. What would be the change in annual cost
if Burgerama had storage space for only 15 boxes per order and thus was forced to use an order quantity of 15?
p.228 5. Office Express sells office suppliers to businesses on a membership basis—i.e., walk-in customers without a membership are not
allowed. The com-pany delivers supplies directly to the purchaser as long as a minimum purchase of $100 is made. In order to encourage bulk
orders, Office Express offers the following discount schedule on pur-chase quantities of boxes of paper. Larry’s Lumber has annual demand of
5,000 boxes of paper, a setup cost of $10 per order, and a holding cost of 22 percent of the purchase price. Calculate the optimal order
quantity. 1–100 boxes $5 per box 100–249 boxes $4.75 per box 250–499 boxes $4.50 per box 500 or more boxes $4.25 per box
p.228 6. A watch repair shop buys batteries for a variety of products. The most frequent battery purchase is for a Y300, with demand of 3,000
per year. The order cost is $15 per order, and the holding cost is $0.50 per battery. Given the following price schedule, calculate the
optimal order quantity. Number of Batteries Price 1–250 $6.00 250–499 $5.50 500–999 $5.00 1,000 or more $4.75
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