An electronics firm has a contract to deliver thefollowing number of radios during the next three months;month 1, 200 radios; month 2, 300 radios; month 3, 300radios. For each radio produced during months 1 and 2, a$10 variable cost is incurred; for each radio produced duringmonth 3, a $12 variable cost is incurred. The inventory costis $1.50 for each radio in stock at the end of a month. Thecost of setting up for production during a month is $250. Radios made during a month may be used to meet demandfor that month or any future month. Assume that productionduring each month must be a multiple of 100. Given thatthe initial inventory level is 0 units, use dynamicprogramming to determine an optimal production schedule.

An electronics firm has a contract to deliver thefollowing number of radios during the next three months;month 1, 200 radios; month 2, 300 radios; month 3, 300radios. For each radio produced during months 1 and 2, a$10 variable cost is incurred; for each radio produced duringmonth 3, a $12 variable cost is incurred. The inventory costis $1.50 for each radio in stock at the end of a month. Thecost of setting up for production during a month is $250. Radios made during a month may be used to meet demandfor that month or any future month. Assume that productionduring each month must be a multiple of 100. Given thatthe initial inventory level is 0 units, use dynamicprogramming to determine an optimal production schedule.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, who works in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $. Assume that the demand is constant throughout the year. (Note: $ is a dollar sign) a) If we are going to use the EOQ inventory model, mention all the assumptions that are made to validate that model. b) How many pounds of type A material should Huda order (i.e. Q*) at a time if she wishes to minimize total inventory cost? c) How many orders per year would be placed? d) What would the annual ordering cost be? e) What would the average inventory be? f) What would the annual holding cost be? See equations below if needed: Annual Ordering cost Annual hdding: Number of orders placed per…
A company forecasts demand for a component at around 2,500 units a year. They make the component internally, and it costs $500 to set up each production run with a variable cost of $30 a unit. The holding costs are 20 % of value a year and the production rate is 10,000 units a year. There is a lead time of two months from receiving a production requisition until finished units begin to come from the production line. Question: How long is each inventory cycle (in weeks)?
XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, who works in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time an order is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $. Assume that the demand is constant throughout the year. (Note: $ is a dollar sign) d) What would the annual ordering cost be? e) What would the average inventory be? f) What would the annual holding cost be? See equations below if needed: Number of orders placed per year Annual Ordering cost Annual hdding= Annual demand Number of units in each order Average inventory Ordering cost per order Ordering cost per order (Carrying cost per unit = b.c
A manager receives a forecast for next year. Demand is projected to be 570 units for the first half of the year and 930 units for the second half. The monthly holding cost is $2 per unit, and it costs an estimated $55 to process an order.
A company is known to have 4 request periods in 1 year. In the first quarter year demand amounted to 750, the 2nd quarter was 900, the third quarter was 1500, and for the fourth quarter it was 900. If the company has an initial inventory of 100, the desired final inventory is 150 units, the cost of normal hours is 100 rupiah/unit, the overtime hour fee is 125 rupiah/unit, the cost of sub-contract hours is 150 rupiah/unit, and lastly the cost of inventory is known to be 20 rupiah per unit per period. Here is the table of normal hours, overtime hours and subcontracts. Period Normal Hours Ovetime Hours Subcontracts 1 700 146 500 2 800 146 500 3 900 146 500 4 500 146 500 Please specify:a. Total cost!b. How much is produced per quarter?c. Analyze Your Answers!
Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct materials per unitproduced. Assume that it is currently at the end of the first quarter of the year, and there are 50,000pounds of material on hand. The company’s policy is to maintain an end-of-quarter inventoryof materials equal to 25 percent of the following quarter’s material requirements for production.How many units of product were produced in the first quarter of the year? Under the assumptionthat production will increase by 10 percent in the second quarter, what are the direct materialsrequirements (in pounds) for planned production in the second quarter?
Your firm uses a periodic review system for all SKUs classified, using ABC analysis, as B or C items. Further, it uses a continuous review system for all SKUs classified as A items. The demand for a specific SKU, currently classified as an A item, has been dropping. You have been asked to evaluate the impact of moving the item from continuous review to periodic review. Assume your firm operates 52 weeks per year; the item’s current characteristics are:Demand 1D2 = 15,080 units/yearOrdering cost 1S2 = $125.00/orderHolding cost 1H2 = $3.00/unit/yearLead time 1L2 = 5 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation of weekly demand of 64 units.a. Calculate the item’s EOQ.b. Use the EOQ to define the parameters of an appropriate continuous review and periodic review system for this item.c. Which system requires more safety stock and by how much?
Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about 2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The company operates 360 days per year and Item X is received 9 days after placement of order.
2) Daily demand for a product is normally distributed with a mean of 100 and a standard deviation of 12. The lead time is normally distributed with a mean of 5 days and a standard deviation of 1.5 days. a) What is the ROP to satisfy a %90 probability of not stocking out? b) What is the safety stock? c) What is the probability of stocking out if the manager has decided not to keep any safety stock? What is the Z value, and what is the probability?
(a) Give examples of independent and related dependent demand (b) APL company assembles and sales an electronics device (ED) on a contract basis. End item ED has composed of 3 units of subassembly BG and 5 units of component DD. BG is assembled using 3 DDs and 4 FCs. There are orders of 500 and 875 units of the device (ED) at the beginning of week 6 and week 8. In assembling BG, an extra 20 percent scrap allowance must be added. DD can only be ordered in whole cases of 400 units per case. One case of DD is received in each of week 1 and week 2. Also, there are 200 units of BG and 425 units of DD now on hand. The lead time for the item BG, DD, and FC is 2 weeks and that is for the item ED is 1 week.i. Calculate the required number of DD and FC for producing 100 units of ED. There is no stock of any item. ii. Prepare a material requirements plan for the component DD.
27) Ali has a restaurant where the customers use a different number of disposable cups each day he is open. Every 30 days, Ali places an order to replenish his cup inventory. It takes 3 days for the order to arrive, at which point it brings the inventory level up to 4000 cups. It costs Ali $30 to have the order processed. Select all statements that apply to Ali's situation: Group of answer choices a) Ali uses a Continuous Inventory System b) d is constant c) Ali uses a Periodic Inventory System d) Ali uses a Fixed-Order-Quantity Inventory System e) Maximum Inventory Level is constant