Production and Operations Analysis, Seventh Edition
Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 4.4, Problem 4P

(a)

Summary Introduction

Interpretation: Total handling cost incurred by the organization during the period of January to August is to be determined.

Concept Introduction:Total handling cost refers to the cost which includes goods and services along with the time and labor.

(b)

Summary Introduction

Interpretation: The average annual cost of holding trucks is to be determined.

Concept Introduction:

The cost of holding inventory (the cost of carrying inventory) refers to the cost that an organization spends during the time. The holding inventory cost includes owing, keeping, and storing the inventory in stocks.

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I need a detailed explanation on how to solve this problem: A paint shop implements an inventory policy on its stock of white paint, which costs the store $6 per can.  Monthly demand for cans of white paint is normal with mean 28 and standard deviation 8.  The replenishment lead time is 14 weeks.  Excess demand is backordered, but costs $10 per back ordered can in labor and loss of goodwill.  There is a fixed cost of $15 per order, and the holding cost is based on 30% interest rate per annum.  In your computations, assume 4 weeks per month. - Write down the model name and parameters. - What are the optimal lot size and reorder points for white paint (include the formulas)? - What is the optimal safety stock (include the formula)?   *** Suppose the paint shop from the above problem adopts a service level policy. - What are the optimal lot size and reorder points for white paint, such that 90% of the cycles are filled without backordering (include all formulas)? - What is the fill rate…
Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs thebusiness $75 to place a single order. Currently the business places 12 orders each year.i) What is the total stock administrative cost of Buckley’s current inventory policy?ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year.  i) What is the total stock administrative cost of Buckley’s current inventory policy?  ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
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