Exam 7: Independent Demand Inventory Management

Gartner Manufacturing Inc. purchases a component from a Malaysian supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days. The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00. -Calculate the reorder point.

Gartner Manufacturing Inc. purchases a component from a Malaysian supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days. The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00. -What is the annual order cost?

Gartner Manufacturing Inc. purchases a component from a Malaysian supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days. The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00. -What is the EOQ size of each order?

We need 3,000 units per year at a unit price of $25 and at a cost of $75 per order, with a carrying cost of 20%. -What is the total annual inventory cost?

A small refrigeration shop stocks up on electric motors from a catalog supplier located in the Midwest. The price of the motors varies depending on the quantity purchased; the price breaks are shown in the table. The refrigeration shop knows it will need around 600 motors for the coming season and that it will cost them about $40 to place an order. The company determined that its inventory carrying cost is 20%. -What is the total annual inventory cost for Option C?

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year. -The supplier tells Wonderful's purchasing agent that the supplier can sell each shampoo bottle for $2.50 each if Wonderful buys a minimum of 300 units at a time. What will be the total annual inventory cost with the new supplier offer?

We need 3,000 units per year at a unit price of $25 and at a cost of $75 per order, with a carrying cost of 20%. -What is the annual order cost?

A small refrigeration shop stocks up on electric motors from a catalog supplier located in the Midwest. The price of the motors varies depending on the quantity purchased; the price breaks are shown in the table. The refrigeration shop knows it will need around 600 motors for the coming season and that it will cost them about $40 to place an order. The company determined that its inventory carrying cost is 20%. -What is the total annual inventory cost for Option A?

Methawks Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item cost = $45 Ordering cost = $50 Inventory carrying cost = 15% The business year is 300 days. -What is the time between each order?

Gartner Manufacturing Inc. purchases a component from a Malaysian supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days. The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00. -If the company decides to order 1,750 units each time it places an order, what will be the total annual cost of this policy? (Do not include the product cost in your answer.)

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year. -Susan's Eatery makes and delivers pad thai for lunch to residential customers and wants to know the reorder point for the custom-made lunch boxes, given the following information: Average daily demand is 100 pad thai lunches, with a daily standard deviation of 17 lunches. The lead time for lunch box purchases is 4 days, with a lead time standard deviation of 2 days. Susan's Eatery wants a 98% service level. Calculate the reorder point.

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year. -Susan's Eatery makes and delivers pad thai for lunch to residential customers and wants to know the reorder point for the custom-made lunch boxes, given the following information: Average daily demand is 100 pad thai lunches, with a daily standard deviation of 17 lunches. The lead time for lunch box purchases is 4 days. Susan's Eatery wants a 95% service level. Calculate the reorder point.

A small refrigeration shop stocks up on electric motors from a catalog supplier located in the Midwest. The price of the motors varies depending on the quantity purchased; the price breaks are shown in the table. The refrigeration shop knows it will need around 600 motors for the coming season and that it will cost them about $40 to place an order. The company determined that its inventory carrying cost is 20%. -Based on the above calculations, how many units the shop should order each time?

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year. -Based on the annual total inventory cost values, which offer should Wonderful take?

We need 3,000 units per year at a unit price of $25 and at a cost of $75 per order, with a carrying cost of 20%. -How many orders per year will be made?

Clay's Forging at Canal Fulton wants to determine its inventory management performance during its past year of operations. Refer to the following information provided by the company: Inventory on hand at beginning of the year = $273,000 Inventory on hand at end of the year = $290,000 Annual cost of goods sold = $1,790,000 Average annual accounts receivable = $45,500 Annual credit sales = $102,000 Beginning-of-year accounts payable = $227,500 End-of-year accounts payable = $316,200 Total annual purchases = $1,575,000 -Based on the above information, calculate the days of payables outstanding (DPO).

Clay's Forging at Canal Fulton wants to determine its inventory management performance during its past year of operations. Refer to the following information provided by the company: Inventory on hand at beginning of the year = $273,000 Inventory on hand at end of the year = $290,000 Annual cost of goods sold = $1,790,000 Average annual accounts receivable = $45,500 Annual credit sales = $102,000 Beginning-of-year accounts payable = $227,500 End-of-year accounts payable = $316,200 Total annual purchases = $1,575,000 -Based on the above information, calculate the inventory days of supply (IDS).

Gartner Manufacturing Inc. purchases a component from a Malaysian supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days. The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00. -What is the time between each order?

The Wonderful Hair Salon buys lots of shampoos. Wonderful follows the exponential-smoothing forecasting method, and based on their forecast calculations, annual demand is 750 units. Wonderful normally pays $3.00 per shampoo bottle when ordering from its supplier. Each order that is placed with the supplier costs $18 to process. Wonderful's holding cost for shampoos is 15% of the cost of the shampoo bottle per year. -Abraham's Eatery uses a lunch box supplier that has a sales rep come by weekly to order boxes. Abraham wants a 98% service level. Abraham's average daily demand is 100 lunches, with a daily standard deviation of 17 lunches. The lead time for lunch box purchases is 4 days. If there are 400 lunch boxes when the rep comes by, how many boxes should be ordered?

The Cosmopolitan store wants to use a periodic review system for its basic apparel product. The product has an annual demand of 7,200 units. Their order cost is $75, and their inventory carrying cost is 18% per dollar per year. The cost of each product is $20. The purchase order lead time is 1 week, and the average daily demand is 18 units, with a standard deviation of 4 units. Cosmopolitan would like to maintain a 99% service level. -William's food company uses the periodic system to order cans of Cajun seasoning every 30 days. It typically takes the supplier 10 days to resupply William. Sales average 8 units per day, with a standard deviation of 2 units per day. William does not carry any safety stock of Cajun seasoning. If he runs out for a period of time, he doesn't care. William just counted his inventory of Cajun seasoning and found 22 cans on the shelf. How many cans should William order?