User Account

All Pages

Two Questions, Operation Management

Assignment Help:
2. You have been assigned to make a long-term sourcing decision for a raw material you will purchase. There is only one supplier of this raw material. You estimate that you need 60 units per day of this raw material, with a standard deviation of 20 units. The supplier charges $300 for each unit and $3,000 fixed cost for each delivery. Whenever you order from the supplier, it delivers in 60 days. You use a 20% interest rate for estimating holding costs. If you run out of raw materials, in which case your production line has to stop, this costs you $1,000 per day for each unit of raw material in shortage. Assume 365 working days per year.
a) What is the optimal (EOQ, ROP) policy you should use?
b) If you use the optimal policy, what is the annual fixed ordering cost, and what is the annual inventory holding cost?
3. The Silky Shirts Company based in Thailand makes silk women’s shirts for a retailer in the U.S. It costs Silky $30 to make each shirt, it sells them to the retailer for $50 and the shirts retail for $100. The retailer estimates he can sell an average of 800 shirts with a standard deviation of 400 at this price per season (normally distributed). The retailer sells all remaining shirts for $20 at the end of the season.
a) How many shirts should the retailer order to maximize his profits?
b) If Silky had its own stores, and could make and sell (at the same retail price as above) its own shirts in its own stores instead of needing the retailer as a middleman, how many shirts would it order assuming demand remained the same as above?






c) Assume that Silky offers the retailer a revenue sharing contract where the retailer shares half the revenue on all sold shirts with Silky, and in return Silky reduces its price from $50. To what level would Silky have to reduce its price to induce the retailer to order as many units as the integrated company would order in Part b) above? (The retailer still sells the shirts for $100 during the season and discounts them to $20 at the end of the season but now gives half of all the revenue obtained to Silky.)

Related Discussions:- Two Questions

Find intermediate calculations to 3 decimal places, travel on Mountain Airl...

travel on Mountain Airlines for the past 18 weeks was: Week Passengers Week Passengers 1 402 10 440 2 410 11 446 3 420 12 451 4 415 13 455 5 412 14 462 6 414 15 466 7 424 16 474 8

Find cause the cost of capital to decrease, Due to changes in regulatory re...

Due to changes in regulatory requirements, the transactions costs associated with selling corporate securities increased by $1 per share. This change will Answer a. cause the co

General questions, wanna know how long it takes to receive a paper

wanna know how long it takes to receive a paper

What are hr as a competitive advantage, Hr as a competitive advantage: I ne...

Hr as a competitive advantage: I need research on the above subject with reference and cited.

Describe operation management strategy for company, Identify how changes in...

Identify how changes in the external environment may affect the operation management strategy for company. For example, what are the following factors likely to have on operation m

Explain disadvantages of the open innovation approach, How might businesses...

How might businesses use the Internet to identify untapped customer needs through open innovation? What do you see as the major advantages and disadvantages of the open innovation

Explain what is the net income for this firm, Lifeline, Inc., has sales of ...

Lifeline, Inc., has sales of $585,000, costs of $273,000, depreciation expense of $71,000, interest expense of $38,000, and a tax rate of 35 percent. What is the net income for thi

Logistics., explain the role of product characteristics on the logistics de...

explain the role of product characteristics on the logistics decision

Quality management systems - improving productivity, Quality Management Sys...

Quality Management Systems - Improving Productivity The introduction of approaches such as ISO 9000; Total quality management, business process reengineering, just-in-time ope

Explain what is the probability distribution of the time, Consider a queuin...

Consider a queuing system with 2 types of customers. Type 1 customers arrive according to a Poisson process with a mean rate of 5 per hour. Type 2 customers arrive according to a P

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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