Exercise 3: Daily demand for a product of a computer manufacturer is 400,000 units. Thecompany, on average, makes $150 net profit for each computer. The current fill rate is86%. About 70% of their incomplete orders are back-ordered, and the rests are cancelled.The company is considering to improve the fill rate to 90% whose estimated dailyadditional operating cost (e.g.,improving the warehousing and transportation) is$2,000,000. What should be the minimum back-order cost to make this investmentreasonable?

The backorder cost per unit to justify any new investment made to counter the losses (or to increase…

Answered: Exercise 3: Daily demand for a product…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normaldistribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week.The new manager desires a service level of 90 percent. Lead time is two days, and the dairy isopen seven days a week. (Hint: Work in terms of weeks.)a. If an ROP model is used, what ROP would be consistent with the desired service level? Howmany days of supply are on hand at the ROP, assuming average demand?b. If a fixed-interval model is used instead of an ROP model, what order size would be needed forthe 90 percent service level with an order interval of 10 days and a supply of 8 gallons on handat the order time? What is the probability of experiencing a stockout before this order arrives?c. Suppose the manager is using the ROP model described in part a. One day after placing anorder with the supplier, the manager receives a call from the supplier that the order will bedelayed because of problems at…
Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normaldistribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week.The new manager desires a service level of 90 percent. Lead time is two days, and the dairy isopen seven days a week. (Hint: Work in terms of weeks.)a. If an ROP model is used, what ROP would be consistent with the desired service level? Howmany days of supply are on hand at the ROP, assuming average demand?
You are the owner of DDD Company. The company is engaged in providing services to telecommunication companies. It has a multi-million sales. However, on an average collection cycle, you only collect the sales after 6 months. Upon reviewing the company's financial statements, you notice a large number of receivables and a large number of payables. The company is having a hard time paying its debts since it cannot collect promptly the receivables. The sales manager told you that the company cannot stop accepting projects because there are many competitors in the market. On the other hand, the collection manager suggested collecting first the receivables before accepting a new project. If you are the owner of DDD Company, what should you do? Give three reaons and explain why
a) b) c) d) e) f) g) h) i) What is the optimal solution (in words? An additional 4 hours of shaper time became available. Evaluate the effect? Explain- Two hours of Grinder time was lost. Evaluate the effect? An additional 20 units of component 3 was requested. Evaluate the effect. The demand for component 2 decreased by 30 units. Evaluate the effect Suppose that the profit contribution of component 1 increases to $9.00. What is the new optimal solution? Suppose that the profit contribution of component 3 decrease by $2.00 . Would the optimal solution change Is the problem degenerate? Explain! Are there alternative optima in this problem? Explain
Old Pueblo Engineering Contractors creates six-month “rolling” schedules, which are recomputed monthly. For competitive reasons (it would need to divulge proprietary design criteria, methods, and so on), Old Pueblo does not subcontract. Therefore, its only options to meet customer requirements are (1) work on regular time; (2) work on overtime, which is limited to 30 percent of regular time; (3) do customers’ work early, which would costan additional $5 per hour per month; and (4) perform customers’ work late, which would cost an additional $10 per hour per month penalty, as provided by their contract. Old Pueblo has 25 engineers on its staff at an hourly rate of $30. The overtime rate is $45. Customers’ hourly requirements for the six months from January to June are January 5000 February 4000 March 6000 April 6000 May 5000 June 4000 Develop an aggregate plan using a spreadsheet. Assume 20 working days in each month. 12. Alan Industries is expanding its product line to include three…
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)?
Zoey Enterprises manufactures solar engines for helicopters. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $11,400 per unit, and the credit price is $13,000 each. Credit is extended for one period. The required return is 1.9 percent per period. If Zoey Enterprises extends credit, it expects that 30 percent of the customers will be repeat customers and place the same order every period forever, and the remaining customers will place one-time orders. Should credit be extended?
As an operations management consultant, you have been asked to evaluate a furniture manufacturer’s cash to cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. a. What would be the impact of reducing the accounts payable from $3,695,000to $2,000,000 and all other data remained the same? Please show in detail these impacts quantitatively in your answers
I need help. I have no idea how to do this. I know the answer for a, but not b. The answer for a, I am going to write it down. I just need help with b. Please, help! 1. All-Star Bat Manufacturing, Inc., supplies baseball bats to major and minor league baseball teams. After an initial order in January, demand over the six-month baseball season is approximately constant at 1000 bats per month. Assuming that the bat production process can handle up to 4000 bats per month, the bat production setup costs are $150 per setup, the production cost is $10 per bat, and the holding costs have a monthly rate of 2%, a. what production lot size would you recommend to meet the demand during the baseball season? Given, Monthly demand=1000 bats. Production capacity=4000 bats per month. Setup cost=$150 per setup. Production cost=$10 per bat. Holding cost=2%. Production lot size=√2AO/C A=Annual demand. O=Setup cost. C=Holding cost. √2*1000*12*150/2% of 10 √3600000/0.2 √18000000 √4242.64…
What is the Z value corresponding to a stock out probability of 2%?
Submit a single Excel file with formulas within answer cells. Show the formulas for the answer County Hospital contracts for an anesthesiologist’s services for a guaranteed cost of $15,000 a month. For every service the anesthesiologist provides on a procedure, the hospital budgets an incremental $200 toward the anesthesiologist’s salary. Every time the anesthesiologist provides a service, the hospital gains revenue of $1200, which is a sixth of the overall procedure’s revenue. Be sure to make excel do the calculations and indicate any units for the answer. How many procedures would an anesthesiologist have to work on monthly for the hospital to Break Even?
12. Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food processing experience, and Angela has extensive commercial food preparation experience. The process will consist of opening crates of lettuce and then sorting, washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs, revenues, and variable cost per bag of lettuce. They think a largely manual process will have monthly fixed costs of $36,000 and variable costs of $1.75 per bag. A more mechanized process will have fixed costs of $72,000 per month with variable costs of $1.25 per bag. They expect to sell the shredded lettuce for $2.75 per bag. Part 2 a) The break-even quantity in units for the manual process = ______ bags (round your response to the nearest whole number). b) The revenue for…

SEE MORE QUESTIONS

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Business in Action

Operations Management

ISBN:

9780135198100

Author:

BOVEE

Publisher:

PEARSON CO

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

Production and Operations Analysis, Seventh Editi…

Operations Management

ISBN:

9781478623069

Author:

Steven Nahmias, Tava Lennon Olsen

Publisher:

Waveland Press, Inc.

SEE MORE TEXTBOOKS