Reference no: EM133929190

Question 1. I Carry rents trucks for moving and hauling. Each truck costs the company an average of $8,000, and the inventory of trucks varies monthly depending on the number that are rented out. During the first eight months of last year, I Carry had the following ending inventory of trucks on hand.

I Carry uses a 20 percent annual interest rate to represent the cost of capital. Yearly costs of storage amount to 3 percent of the value of each truck, and the cost of liability insurance is 2 percent. Get expert online assignment help in the USA.
Determine the total holding cost incurred by I Carry during the period January to August. Assum for the purposes of your calculation that the holding cost incurred in a month is proportional to the inventory on hand at the end of the month.
Assuming that these eight months are representative, estimate the average annual cost of holding trucks.

Question 2. A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffeehouse estimates that it costs $45 in paperwork and labor to place an order for the coffee, and holding costs are based on a 20 percent annual interest rate.
Determine the optimal order quantity for Colombian coffee.
What is the time between placement of orders?
What is the average annual cost of holding and setup due to this item?
If replenishment lead time is three weeks, determine the reorder level based on the on-hand inventory.

Question 3. A purchasing agent for a particular type of silicon wafer used in the production of semiconductors must decide among three sources. Source A will sell the silicon wafers for $2.50 per wafer, independently of the number of wafers ordered. Source B will sell the wafers for $2.40 each but will not consider an order for fewer than 3,000 wafers, and Source C will sell the wafers for $2.30 each but will not accept an order for fewer than 4,000 wafers. Assume an order setup cost of $100 and an annual requirement of 20,000 wafers. Assume a 20 percent annual interest rate for holding cost calculations. Which source should be used, and what is the size of the standing order?

Question 4. Billy's Bakery bakes fresh bagels each morning. The daily demand for bagels is approximately a normal random variable with mean and standard deviation . The bagels cost Billy's 8 cents to make, and they are sold for 35 cents each. Bagels unsold at the end of the day are purchased by a nearby charity soup kitchen for 3 cents each. Determine the optimal number of bagels to bake each day.