Rocky Mountain Tire Center sells 7,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 30% of the purchase price of the tires per year. The purchase price is $23 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more-but fewer than 5,000-tires are ordered, and $15 per tire if 5,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is units (enter your response as a whole number). b) What is the total cost of this policy? Total annual cost of ordering optimal order size = $ (round your response to the nearest whole number).

Rocky Mountain Tire Center sells 7,000 go-cart tires per year. The ordering cost for each order is $40, and the holding cost is 30% of the purchase price of the tires per year. The purchase price is $23 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more-but fewer than 5,000-tires are ordered, and $15 per tire if 5,000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is units (enter your response as a whole number). b) What is the total cost of this policy? Total annual cost of ordering optimal order size = $ (round your response to the nearest whole number).

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?
Annual demand= 360 units Holding cost per year = 1 $ per unit Ordering cost = $ 100 per order Compute EOQ , total cost(holding and ordering cost),no of order per year and expected time (days) between orders(Assuming a 300-day work ) and what would the actual total holding and ordering costs be if the annual demand was actually higher than estimated i.e 500 units instead of 360 units, but the EOQ established above is used. If demand for an item is 3 units per day, and delivery lead time is 15 days, what would be the re-order point?
Hi Tech Corporation (HTC) expects to order 295,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $32; and the firm’s inventory carrying costs is equal to 18 percent of the purchase price. EOQ=2309.75. If HTC is able to negotiate a reduction in the fixed ordering costs to $250.00 per order, but HTC decides to carry a safety stock of 28 days of memory chip sales. With the reduced fixed ordering cost and the increased average inventory due to the safety stock carried, what is the additional total inventory costs due to the decision to balance out uncertainty by carrying the specified safety stock?
Discount-Mart, a major East Coast retailer, wants todetermine the economic order quantity (see Chapter 12 for EOQformulas) for its halogen lamps. It currently buys all halogenlamps from Specialty Lighting Manufacturers in Atlanta. Annualdemand is 2,000 lamps, ordering cost per order is $30, and annualcarrying cost per lamp is $12. a) What is the EOQ?b) What are the total annual costs of holding and ordering(managing) this inventory?c) How many orders should Discount-Mart place with SpecialtyLighting per year?
Rocket Racer builds 200,000 go-carts a year and purchases the motors for these carts for $850 each. Ordering costs are $1,040, and Rocket Racer's inventory carrying costs average 15% of the inventory value. What is the total inventory costs for an inventory order size of 4000?
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. PARAMETER Item cost Order cost Annual holding cost Annual demand Average weekly demand Standard deviation of weekly demand. Lead time. Service probability Optimal order quantity Reorder point units units VALUE $12.00 $194.00/order 21% of item cost 24,700 units 494 /week 20 units 2 week 95% a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find your z-value and then round that z- value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.)
Dunstreet's Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on-hand. How many sheets should you order? Note: Use Excel's NORM.S.INV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.
Dunstreet's Department Store would like to develop an inventory ordering policy with a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 3,200 per year. The store is open 365 days per year. Every four weeks (28 days) inventory is counted and a new order is placed. It takes 15 days for the sheets to be delivered. Standard deviation of demand for the sheets is three per day. There are currently 180 sheets on-hand. How many sheets should you order? Note: Use Excel's NORM.S.INV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number. Number of sheets
Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 3,000 rolls. The cost per roll is $1,000, and the annual holding cost is 28 percent of the cost. Each order costs $75. Part 2 a. How many rolls should Yellow Press order at a time? Yellow Press should order enter your response here rolls at a time. (Enter your response rounded to the nearest whole number.) Part 3 b. What is the time between orders? (Assume 200 workdays per year.) The time between orders is enter your response here days. (Enter your response rounded to one decimal place.)
Dunstreet's Department Store would like to develop an inventory ordering policy with a 90 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 4,300 per year. The store is open 365 days per year. Every four weeks (28 days) inventory is counted and a new order is placed. It takes 9 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 100 sheets on-hand. How many sheets should you order? (Use Excel's NORM.S.INV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.) Number of sheets
Dunstreet’s Department Store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 5,000 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is five per day. There are currently 150 sheets on hand. How many sheets should you order?