Exam 19: Special Inventory Models

In a one-period inventory model,the higher the after-season sales price,the higher the order placed at the start of the season.

Scenario C.1 Jerry Allison is in charge of production for a small producer of plumbing supplies.The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day.The company produces (and sells)the cricket 300 days per year.Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. -Use the information in Scenario C.1.What is the maximum inventory if Jerry chooses to produce at the economic production lot size (ELS)?

When do one-period decisions on inventory arise in practice?

Scenario C.2 Kyle store sells K2 skis.The store makes a $200 profit per unit sold during the ski season,but it will take a $50 loss per unit if sold after the season is over.The following discrete probability distribution has been estimated for the season's demand. -Use the information in Scenario C.2.What is the best order quantity?

Walter White must satisfy an annual demand of 50,000 pounds per year.The setup cost for each batch is $6500 and once the setup is complete,the product may be produced at the rate of 1800 pounds per day.There is a holding cost of $15 per unit per year and the plant operates on a 350-day production year.Determine the relevant parameters and sketch the inventory cycle through two complete cycles,labeling all lines and vertices.

Scenario C.1 Jerry Allison is in charge of production for a small producer of plumbing supplies.The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate of 90 units per day.The company produces (and sells)the cricket 300 days per year.Setup cost to produce this model averages $22 and the item has a holding cost of $3 per unit per year. -Use the information in Scenario C.1.If Jerry chooses to produce the batch size suggested by the economic production lot size (ELS)model,what is the annual cost?

As an inventory manager,you must decide on the order quantity for an item.Its annual demand is 300 units.Ordering cost is $20 each time an order is placed,and the holding cost is 30 percent of the per-unit price.Your supplier provided the following price schedule. What ordering-quantity policy do you recommend?

For analysis using the economic production lot size (ELS)model to be useful,the producer must be able to produce the item faster than it is consumed.

Consider a noninstantaneous replenishment situation in which the production rate is 100 units per day,the demand rate is four units per day,and the economic production lot size is 500 units.Which of the following statements is true?

Pick any three products that occupy both extremes and the midpoint of the one-period model continuum.Explain why the products occupy these positions and identify the ideal inventory model for determining the best order quantity or each.

As an inventory manager,you must decide on the order quantity for an item.Its annual demand is 1,000 units.Ordering costs are $50 each time an order is placed,and the holding cost is 25 percent of the per-unit price.Your supplier provided the following price schedule. What ordering-quantity policy do you recommend?

A world traveler prepares to leave the comforts of home for a back to nature visit to Gilligan's Island,where all transactions are conducted in coconuts and the banking system is completely undeveloped.The traveler can buy coconuts for $2 each before the journey.If he fails to bring enough coconuts with him and runs out,he must get some coconuts flown in at a cost of $5 each.If he finishes his vacation and has leftover coconuts he can cash them in when he returns home,but will receive only $1.50 per coconut.What is his loss per unit if he overstocks on coconuts prior to leaving home?

Warren's Ice Cream makes 4 different flavors of ice cream using their secret process and top secret recipes.Each of their flavors is equally popular and experiences a demand of 5,000 gallons/year.Warren's process is capable of producing 100 gallons/day once they incur the $25 setup cost.The ice cream holding cost is 10% of the $5 per gallon price.Warren's plant runs 250 days a year and stays busy doing so but management feels they can add another flavor to their product line and increase their revenue.Which of the following statements is appropriate for this scenario?