1)Identify the appropriate inventory model to obtain the optimal lot size (quant
ID: 455634 • Letter: 1
Question
1)Identify the appropriate inventory model to obtain the optimal lot size (quantity) for the given problem description:
A small grocery store sells fresh produce, which it obtains from a local farmer. During the strawberry season, demand for fresh strawberries can be reasonably approximated using a normal distribution with a mean of 40 quarts per day and a standard deviation of 6 quarts per day. The grocer purchases fresh strawberries daily from the local farmer for $1.5 per quart and sells them for $3.20 per quart. At the end of each business day, any remaining strawberries are sold to a producer of fresh juice for 50 cents.
Select one:
a. Fixed Interval
b. Single Period
c. EPQ
d. EOQ
e. ROP
2)
Identify the appropriate inventory model to obtain the optimal lot size (quantity) for the given problem description:
Rick Jones is chairman of this year’s Walk for Diabetes event. Each year, the organizers of the event typically have commemorative T-shirts available for purchase by the entrants in the walk. Rick needs to order the shirts well in advance of the actual event. Based on past walks, the organizers have determined that the demand for T-shirts is normally distributed with a mean of 100 and a standard deviation of 10. Rick plans to sell the T-shirts for $20 each. He pays his supplier $8 for each shirt and can sell any unsold shirts for rags at $2 each. Determine how many T-shirts Rick should order to maximize his expected profits.
Select one:
a. Fixed Interval
b. Single Period
c. EPQ
d. EOQ
e. ROP
3)
The home appliance department of a large department of store is using the re-order point inventory management system to control the replenishment of a particular model of CD players. The store sells an average of 10 CD players each week. Weekly demand follows a normal distribution with a standard deviation of 2 CDs. Replenishment lead time is 16 weeks. What is the standard deviation of the demand during lead time? (see your in-class notes or the textbook)
Select one:
a. 2
b. 8
c. 32
d. 64
4)
The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5000 per day. FSF supplies hot dogs to local restaurants at a rate of 250 per day. The cost to prepare the equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The factory operates 300 days a year. Which inventory model is applicable and why? HINT: Before you answer the question, think about and decide on whose perspective you are solving this problem from, the local restaurants or the FSF.
Select one:
a. EOQ since the restaurants order hot dogs from the FSF and the demand rate is constant and known for the hot dogs.
b. EPQ since the FSF is producing the hotdogs and selling them to restaurants and the production rate at the FSF far exceeds the demand rate for the hot dogs.
5)
Which one of the following factors is not considered when calculating holding cost per unit per unit time (H)?
Select one:
a. Opportunity Cost
b. Insurance
c. Depreciation
d. Rent
e. Demand
6)
A toy manufacturer uses approximately 32,000 slicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $3 per slicon chip. The optimal ordering quantity is 1600 chips per order. What is the TOTAL holding (carrying) cost per year under the optimal inventory management policy?
Select one:
a. $3
b. $480,000
c. $2400
d. 3600
7)
A toy manufacturer uses approximately 32,000 slicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is $3 per slicon chip. The optimal ordering quantity is 1600 chips per order. What is the assumed ordering cost, i.e. S ?
Select one:
a. 120
b. 0.075
c. Enough information is not given.
d. 240
Explanation / Answer
1.
GIVEN: deamnd, d mean of 40 quarts per day and a standard deviation of 6 quarts per day. cost price $1.5 per quart selling price $3.20 per quart salvage cost 50 cents. a. Fixed Interval b. Single Period c. EPQ d. EOQ e. ROP since, the actual demand is not known, and only the demand characterstics, like mean and std dev are known, hence a probabilistic inventory model will be suitable. that leaves us with Single period, and fixed interval models In a single-period model, the items unsold at the end of the period is not carried over to the next period. here, the strawberries at the end of the day are sold at 50 cent salvage cost Hence, the appropriate inventory model to obtain the optimal lot size for the given problem description will be b. Single period modelRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.