Suppose that you work in the inventory planning department of a large electronics store, and a...

Suppose that you work in the inventory planning department of a large electronics store, and a (Q, R) inventory system is used to control the replenishment of a popular LCD computer monitor. The store pays $85 for each monitor when it purchases the monitors from its supplier in Asia; in addition, a fixed setup fee of $275 is charged for each order. Assume the annual holding rate is 15%. The penalty cost per shortage is $10. Monthly demand is normally distributed with mean 400 and standard deviation 35, and the order lead time is 1.5 months.

A. Calculate the order quantity (using EOQ approximation) and the optimal re-order point.

B. Calculate the service level, the safety stock level, and the expected number of shortages per cycle.

C. Calculate the expected annual setup cost, inventory holding cost, and shortage cost. If the store wants to maintain a fixed service level of 97%, calculate the re-order point.

D. Compare your answer of part d) with your answers for part (a) and (b), which service level is higher and which re-order point is larger?

Solutions

Expert Solution

keosha answered 2 days ago

Next > < Previous

Related Solutions

Imagine that you work at a local department store in a midlevel management position. You learn...

Imagine that you work at a local department store in a midlevel management position. You learn that your company is being acquired by Big Box, a much larger, non-union retailer. The sale and purchase of your store is intended to bring more product, logistical efficiency, and employee efficiencies to your particular market. Describe three significant HR issues that you and your people will likely face after your company is acquired.

An electronics store has 4 branches in a large city. They are curious if sales in...

An electronics store has 4 branches in a large city. They are curious if sales in any particular department are different depending on location. They take a random sample of purchases throughout the 4 branches – the results are recorded below. Run an independence test for the data below at the 0.05 level of significance. Appliances TV Computers Cameras Cell Phones Branch 1 54 28 61 24 81 Branch 2 44 21 55 23 92 Branch 3 49 18 49...

You work as a security administrator of the “Medium Department Store” (MDS) chain. The CIO of...

You work as a security administrator of the “Medium Department Store” (MDS) chain. The CIO of the company has tasked you to research and design 2 courses of action (CoA) to update the current, non-existing, network security solution. It should cover the risk and how to mitigate the risk. The solution should cover at least: Policies must address at the least the following: Insider theftPhysical theft / prevention Subcontractor /third party Data transfer security / loss prevention Data breach response...

Imagine you are a security consultant for a large department store. Explain how you would target...

Imagine you are a security consultant for a large department store. Explain how you would target shoplifters. Include specific information about the psychological and demographic characteristics of shoplifters.

The construction department is planning to bid on a large project for the development of a...

The construction department is planning to bid on a large project for the development of a new airport in Chicago area. The following table shows major activities, times, and sequence required: Activity Immediate Predecessor Activity Duration, Months Optimistic Most Likely Pessimistic A - 2 3 4 B A 1 2 3 C A 4 5 12 D A 3 4 11 E B 1 3 5 F C 1 2 3 G D 1 8 9 H E, F 2...

Phillip is planning on opening an electronics store. He will run it for only 1 year....

Phillip is planning on opening an electronics store. He will run it for only 1 year. The initial cost for opening a store is 500K and it will generate an EBIT of 800k at the end of year for sure. Risk-free rate is 5%, tax rate is 35%. Suppose John’s current wealth is 50k. He can borrow money from a bank. Bank knows that his electronic store will generate EBIT of 800k at the end of year for sure. In...

Phillip is planning on opening an electronics store. He will run it for only 1 year....

Phillip is planning on opening an electronics store. He will run it for only 1 year. The initial cost for opening a store is 500K and it will generate an EBIT of 800k at the end of year for sure. Risk-free rate is 5%, tax rate is 35%. Suppose Phillip has enough wealth to cover the initial cost of 500k. Assume that he can’t borrow money. In this situation, would he want to open the electronic store? What is the...

Suppose you work for a company that manufactures electronics. The development analysts estimate that 2% of...

Suppose you work for a company that manufactures electronics. The development analysts estimate that 2% of their flagship product will fail within 2 years of the purchase date, with a replacement cost of $ 1300. A newly hired associate at the company proposes to charge $ 20 for a 2 year warranty. a. Compute the expected value of this proposal. Let X be the amount profited or lost (by the company) on the warranties and P(X) is the probability. E=...

Suppose you work for a company that manufactures electronics. The development analysts estimate that 4% of...

Suppose you work for a company that manufactures electronics. The development analysts estimate that 4% of their flagship product will fail within 2 years of the purchase date, with a replacement cost of $ 1800. A newly hired associate at the company proposes to charge $ 67 for a 2 year warranty. a. Compute the expected value of this proposal. Let X be the amount profited or lost (by the company) on the warranties and P(X) is the probability. E=E=...

A large department store is curious about what sections of the store make the most sales....

A large department store is curious about what sections of the store make the most sales. The manager has data from ten years prior that show 30% of sales come from Clothing, 25% Home Appliances, 18% Housewares, 13% Cosmetics, 12% Jewelry, and 2% Other. In a random sample of 550 current sales, 188 came from Clothing, 153 Home Appliances, 83 Housewares, 54 Cosmetics, 61 Jewelry, and 11 Other. At α=0.10, can the manager conclude that the distribution of sales among...

Subjects