Determine economic order quantity-average inventory level

Assignment Help Operation Management

Reference no: EM131124820

Fly-at-Night Express uses 10,000 #3 envelopes per month. It costs $50 to order and receive a shipment of these envelopes. The envelopes cost $.40 each, and Fly-at-Night uses an inventory carrying cost rate of 30% per year.

a. Determine the economic order quantity, the average inventory level, and the time between orders if Fly-at-Night operates 307 days per year.

b. What should the reorder point be if the envelope supplier takes ten working days to deliver?

c. If the usage rate given is an average and the standard deviation of daily usage of envelopes is 75, what should the reorder point and safety stock be if Fly-at-Night wants to take no more than a 5% chance of running out of stock of envelopes during any given order cycle (i.e., z = 1.645)?

Reference no: EM131124820

Questions Cloud

The management of firm finances is extremely important : The management of a firm’s finances is extremely important to its success. Your firm may bring in $1B in sales but if the firm is mismanaged, it may suffer a net operating loss (a net income of less than $0). What is financial management and why is i..

Continue red zuma project : Top management has accepted the schedule created at the end of Part 2. Prepare a brief memo that addresses the following questions: 1. How much will the project cost? What is the most expensive activity? 2. What does the cash flow statement tell you ..

Use to produce the forecasted demand : You are the operations manager for an OEM manufacturing plant that produces YBOX game consoles. Based on the sales record from 2014, the marketing manager forecasts the demand for Jan- June of 2015 as the following: JAN. FEB. MAR. APR. MAY JUNE 2,500..

Monopolistic competition and pure competition : There are four market structures described in your text, monopoly, oligopoly, monopolistic competition and pure competition. pick one of these and explain what type of good is likely to be traded under that market structure. Please give a specific ex..

Determine economic order quantity-average inventory level : Fly-at-Night Express uses 10,000 #3 envelopes per month. It costs $50 to order and receive a shipment of these envelopes. The envelopes cost $.40 each, and Fly-at-Night uses an inventory carrying cost rate of 30% per year. Determine the economic orde..

Use an order quantity to take advantage of the discount : Wilshire Farms uses 6000 pounds per year of a special feed supplement that costs $5 per pound. The supplement’s supplier offers a two percent discount (to $4.90 per pound) if it is ordered in quantities of 3000 pounds or more at a time. It costs $100..

Employee to recover under workers compensation system : Which of the following is true of a person's capacity to be a principal or agent? For an employee to recover under a workers’ compensation system what percentage of negligence must the employer be found guilty of?

Under workers compensation : Bruce arrived at work one day and him boss said to him, "You dress poorly; you're fired." Assuming that Bruce is an at-will employee, which of the following is true? Mark was accidentally injured by a fellow worker while working his shift. Under work..

What is standard deviation to be used when constructing : If the fraction defective is 0.1 based on a sample size of 14, what is the standard deviation to be used when constructing a "p" chart? Note: Limit your answer to two significant decimal places. i.e. 0.09 instead of .0875

User Account

All Pages