operations management

1. Pet Food Inc.: A local retailer of pet food faces demand for one of its items at a constant rate of 30,000 bags per year. It costs them $10 to process an order and $1 per bag per year to carry the item in stock.   The stock is received four working days after an order is placed.   Assume 300 working days in a year and no backordering. 

What is the reorder point?

A. cannot be calculated with the given information

 

B. 400

 

C. 300

 

D. 500

 

E. 600

 

2. Pet Food Inc.: A local retailer of pet food faces demand for one of its items at a constant rate of 30,000 bags per year. It costs them $10 to process an order and $1 per bag per year to carry the item in stock.   The stock is received four working days after an order is placed.   Assume 300 working days in a year and no backordering.

 

What is the optimal order quantity (rounded to the nearest full bag)?A.800

B.700

 

C.750

 

D. 775

 

E.725

 

 

 

 

 

3. Full Court Press:  FCP, Inc. buys slick paper in 1500 pound rolls for textbook printing.   Annual demand is 1920 rolls.   The cost per roll is $1000, and the annual holding cost is 15 percent of the cost.   The ordering costs are $250 per order.

 

Optimal total cost of inventory (excluding cost of item) is:

 

A.$14,000

 

B.cannot be determined with the given information

 

C.$8,000

 

D.$10,000

 

E.$12,000

 

 

4. Full Court Press:  FCP, Inc. buys slick paper in 1500 pound rolls for textbook printing.   Annual demand is 1920 rolls.   The cost per roll is $1000, and the annual holding cost is 15 percent of the cost.   The ordering costs are $250 per order.

Approximately, how often does the company place an order (1year = 52 weeks)?

 

A.every quarter

 

B.every three weeks

 

C.every week

 

D.every two weeks

 

E.every month

 

 

5. Pet Food Inc.: A local retailer of pet food faces demand for one of its items at a constant rate of 30,000 bags per year. It costs them $10 to process an order and $1 per bag per year to carry the item in stock.   The stock is received four working days after an order is placed.   Assume 300 working days in a year and no backordering.

How often does the company place an order (1year = 300 working days )?

A.2.58 day

 

B.5.25 days

 

C. 7.75 days

 

D.3.1 days

 

E.1.34 days

 

 

6. Pet Food Inc.: A local retailer of pet food faces demand for one of its items at a constant rate of 30,000 bags per year. It costs them $10 to process an order and $1 per bag per year to carry the item in stock.   The stock is received four working days after an order is placed.   Assume 300 working days in a year and no backordering.

What is the optimal total inventory cost (rounded to the dollar)?

A. 775

 

B.700

 

C.750

 

D.725

 

E.800

 

7. Full Court Press:  FCP, Inc. buys slick paper in 1500 pound rolls for textbook printing.   Annual demand is 1920 rolls.   The cost per roll is $1000, and the annual holding cost is 15 percent of the cost.   The ordering costs are $250 per order.

How many rolls should Full Court Press order at a time?

A.60

 

B.80

 

C.120

 

D.100

 

E.40

 

8. Pet Food Inc.: A local retailer of pet food faces demand for one of its items at a constant rate of 30,000 bags per year. It costs them $10 to process an order and $1 per bag per year to carry the item in stock.   The stock is received four working days after an order is placed.   Assume 300 working days in a year and no backordering.

What is the demand during lead time assuming that there is no variability?

A. 600

 

B. 700

 

C.

400

 

D. 500

 

E. 300

 

9. Ace Hardware has introduced the following quantity discounts for a special product:

            Order Quantity Price per Unit

0-299 $60.00

300-499 $58.80

500 or more $57.00

The annual demand for this item is 936, its ordering cost is $45 per order, and its annual holding cost is 25 percent of the unit price.

What is the order size to minimize total cost?

A.500

 

B.75

 

C.77

 

D.76

 

E.300

 

 

 

10. Ace Hardware has introduced the following quantity discounts for a special product:

            Order Quantity Price per Unit

0-299$60.00

300-499 $58.80

500 or more $57.00

The annual demand for this item is 936, its ordering cost is $45 per order, and its annual holding cost is 25 percent of the unit price. 

What is the minimum total cost of inventory?

 

A.$56,603.40

 

B.$57,284.10

 

C.$56,998.74

 

D.$54,857.98

 

E.$57,382.20

 

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