MGT 322 Chapter 13
Chapter 13
1 – The manager of an automobile repair shop hopes to achieve a better allocation of inventory control efforts by adopting an A-B-C approach to inventory control.
Given the monthly usa
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MGT 322 Chapter 13
Chapter 13
1 – The manager of an automobile repair shop hopes to achieve a better allocation of inventory control efforts by adopting an A-B-C approach to inventory control.
Given the monthly usages in the following table, classify the items in A, B, and C categories according to dollar usage:
Determine the percentage of items in each category and the annual dollar value for each category.
3 – A large bakery buys flour in 25-pound bags. The bakery uses an average of 4,860 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 per bag.
a. Determine the economic order quantity.
b. What is the average number of bags on hand?
c. How many orders per year will there be?
d. Compute the total cost of ordering and carrying flour.
e. If holding costs were to increase by $9 per year, how much would that affect the minimum total annual cost?
5 – Garden Variety Flower Shop uses 750 clay pots a month. The pots are purchased at $2 each. Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs are $20 per order. The manager has been using an order size of 1,500 flower pots.
a. What additional annual cost is the shop incurring by staying with this order size?
b. Other than cost savings, what benefit would using the optimal order quantity yield?
9 – The Friendly Sausage Factory (FSF)can produce hotdogs at a rate of 5,000 per day. FSF supplies hot dogs to local restaurants at a steady 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. Find:
a. The optimal run size.
b. The number of runs per year.
c. The length (in days) of a run.
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