Satisfy a growing demand for the salamis in silicon valley

Assignment Help Operation Management
Reference no: EM131033973

David’s Delicatessen files in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is pretty steady at 175 per month. The salamis cost Gold $1.85 each. The fixed cost of calling his brother in New York and having the salamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelf space of 3 percent of the value of the item, and a cost of 2 percent of the value for taxes and insurance.

a. How many salamis should Gold have flown in and how often should he order them?

b. How many salamis should Gold have on hand when he phones his brother to send another shipment?

c. Suppose that the salamis sell for $3 each. Are these salamis a profitable item for Gold? If so, what annual profit can he expect to realize from this item? (Assume that he operates the system optimally.)

d. If the salamis have a shelf life of only 4 weeks, what is the trouble with the policy that you derived in part (a)? What policy would Gold have to use in that case? Is the item still profitable?

Reference no: EM131033973


Write a Review


Operation Management Questions & Answers

  How do you prepare a marketing plan

How do you prepare a marketing plan when starting a new sports bar business?

  Conflict between managers and outside shareholders

Corporate Finance: A Focused Approach- End of Chapter Discussion Question: 13-2. What is the possible agency conflict between inside owner/managers and outside shareholders?

  What factors would you consider in your evaluation

You are the product manager responsible for a horrible product failure but in your wisdom, you are evaluating why the product failed. What factors would you consider in your evaluation

  What would the average inventory be for this lot size

About how many runs per year would there be? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

  Performing a security risk assessment

lay Around Toys Inc. is performing a security risk assessment. Click here to download a spreadsheet with Exposures, Probability of Occurrence, and Average Loss. Tasks: Calculate the expected annual loss for each exposure and create a graph. Submit a ..

  Illustrate what potential legal or ethical issues

Illustrate what potential legal or ethical issues which might be encountered if this type of policy is implemented as well as ways to avoid these issues.

  Essence of project management is risk management

Consider the following statement: “The essence of project management is risk management.” What does it mean in terms of completing a project successfully?

  Process of organizational change

How has the need for organizational change consulting been impacted by technology? How has the process of organizational change been impacted by technology?

  About the aircraft control system

A new aircraft control system is being designed that must be 98.5% reliable. This system consists of three components in series. If all three of the components are to have the same level of reliability, what level of reliability is required for each ..

  Process design and supply chains

This is part one of a two part assignment starting with an introductory look at process design and supply chains.

  Explain the sarbanes-oxley act

Explain the Sarbanes-Oxley Act and its impact on corporate governance. How has it changed the way we do business in the United States? Please include an example to support your viewpoint.

  Firms are experiencing increase in JIT and lean production

What are some advantages and disadvantages of JIT and lean production? Why do you think many firms are experiencing an increase in JIT and lean production? Are there organizational issues that enter the decision to lower inventory level? How do you f..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd