Question

In: Other

​The Discount Appliance Store uses a continuous review system (Q system).

The Discount Appliance Store uses a continuous review system (Q system).

One of the company's items has the following characteristics:

- Demand =10 units/week (assume 52 weeks per year)

- Ordering or Setup Cost (S)=$ 45) order

- Holding cost (H)=$12 unit/year

- Lead Time (L)=3 weeks (constant)

- Standard Deviation in Weekly Demand = 8 units

- Cycle-Service Level =70%

What is the EOQ for this item?

What is the desired safety stock?

What is the desired reorder point R?

What is the total annual cost?

Suppose that the current policy is Q=80 and R=150. What will be the changes in average cycle inventory and safety stock if your EOQ and R values are implemented?


Solutions

Expert Solution


Related Solutions

A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per...
A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per unit. The following information applies to this product. Demand = 20 units/day Order cost = $56/order Annual holding cost = 25% of purchase price Desired cycle-service level = 90% (z=1.28) Lead time = 10 days Standard deviation of daily demand = 4 units Current on-hand inventory 220 units, with no open orders or back orders The store operates 52 weeks per year, 6 days...
A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per...
A discount appliance store sells iPhones. The store purchases iPhones at a price of $95 per unit. The following information applies to this product. Demand = 20 units/day Order cost = $56/order Annual holding cost = 25% of purchase price Desired cycle-service level = 90% Lead time = 10 days Standard deviation of daily demand = 4 units Current on-hand inventory 220 units, with no open orders or back orders The store operates 52 weeks per year, 6 days per...
Problem 2 Cindy’s Appliance Store uses a perpetual inventory system, and ending inventory at April 30...
Problem 2 Cindy’s Appliance Store uses a perpetual inventory system, and ending inventory at April 30 was $25,000. Following is a listing of transactions for Cindy’s for the month of May. Cindy’s purchased refrigerators from GE on account at a total cost of $500,000 with terms 2/10, n/30. Cindy’s also paid freight of $800 on the refrigerators purchased from GE. Several of the refrigerators had to be returned to GE, and GE issued a credit to Cindy’s for 10 refrigerators...
Your firm uses a continuous review system and operates 52 weeks per year. One of the...
Your firm uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics. Demand (D) = 20,000 units/year Ordering cost (S) = $40/order Holding cost (H) = $2/unit/year Lead time (L) = 2 weeks Cycle-service level = 95 percent Demand is normally distributed, with a standard deviation of weekly demand of 100 units. Current on-hand inventory is 1,040 units, with no scheduled receipts and no backorders. a. Calculate the item’s EOQ. What...
Your firm uses a continuous review system and operates 52 weeks per year. One of the...
Your firm uses a continuous review system and operates 52 weeks per year. One of the SKUs has the following characteristics. Refer to the Z values. >Demand (D) = 20,600units / (year) >Ordering cost (S) = $45.00/order >Holding cost (H)=$3.00/unit/year > Lead (L) = 1 weeks >Cycle-service |evel=96% >Demand is normally distributed, with a standard deviation of weekly demand of 103 units. >Current on-hand inventory is 1,040 units, with no scheduled receipts and no backorders. The item's economic order quantity...
Appliance for Less is a local appliance store. It costs this store $23.44 per unit annually...
Appliance for Less is a local appliance store. It costs this store $23.44 per unit annually for storage, insurance, etc., to hold microwave in their inventory. Sales this year are anticipated to be 266 units. Each order costs $68. The company is using Economic Order Quantity model in placing the orders. It takes approximately 2 day(s) to receive an order after it has been placed. If the store insists on a 6 day(s) safety stock (assume 365-days a year), what...
Explain whether the continuous review or periodic review inventory system is likely to result in higher...
Explain whether the continuous review or periodic review inventory system is likely to result in higher safety stock. Which is likely to require more time and effort to administer? Why
Explain whether the continuous review or periodic review inventory system is likely to result in higher...
Explain whether the continuous review or periodic review inventory system is likely to result in higher safety stock. Which is likely to require more time and effort to administer? Why??
Question 1: The local convenience store wants to place a beverage on a continuous review inventory...
Question 1: The local convenience store wants to place a beverage on a continuous review inventory replenishment policy. The demand on average is 15 cases per month. It costs 5 dollars to place an order. The cost per case of the beverage is 12 dollars. The interest rate per week is 0.5% per week per case. The lead time for every order is 2 weeks. Demand is 15 cases per month and standard deviation is 2.7 a) ( Use EOQ...
The Cullumber Appliance Store is an experienced home appliance dealer. Cullumber also offers a number of...
The Cullumber Appliance Store is an experienced home appliance dealer. Cullumber also offers a number of services together with the home appliances that it sells. Assume that Cullumber sells dishwashers on a standalone basis. Cullumber also sells installation services and maintenance services for dishwashers. However, Cullumber does not offer installation or maintenance services to customers who buy dishwashers from other vendors. Pricing for dishwashers is as follows. Dishwasher only $1,273 Dishwasher with Installation service 1,407 Dishwasher with maintenance services 1,541...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT