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

Explain how stance on social responsibility, Q1. Should an organization alw...

Q1. Should an organization always adopt a broad stance on social responsibility? Explain how you agree or disagree with this question and why you have this perspective. Q2. What

Value driven approach, value driven approach to production managemeent

value driven approach to production managemeent

Explain collective bargaining process, Detail the five measures that unions...

Detail the five measures that unions have taken in the collective bargaining process to introduce provisions that would protect employees displaced or laid off due to technology ch

Process capability - statistical process control, Process Capability - Stat...

Process Capability - Statistical Process Control The controls charts described so far are concerned with maintaining the stability of a process, but they offer no comment on

Reference Book, Hello Sir, This is Riddhi Trivedi I, am Faculty of Commerge...

Hello Sir, This is Riddhi Trivedi I, am Faculty of Commerge and Management. Subject is there Materials & Production Management, but i want a perfect reference book where i get all

Turnround at the preston plant, what are the most significant events in the...

what are the most significant events in the story of how the plant survived because of its adoption of quality based principles

Objectives of good layout, Objectives of Good Layout Any of the follow...

Objectives of Good Layout Any of the following objectives might be achieved through a good layout: Provide enough production capacity. Reduce material handlin

Manager case, In the table given below the Distribution Manager is expected...

In the table given below the Distribution Manager is expected to service these DCs as per the demands placed. If the actual sales after completing week one is as follows, what woul

Explain portfolio management, Portfolio Management" Please respond to the f...

Portfolio Management" Please respond to the following: •From the e-Activity, determine what actions / changes are necessary within the organization to reach the synchronized stage

Explain services from goods, Which of the following is not a characteristic...

Which of the following is not a characteristic that distinguishes services from goods? Service jobs are unskilled A service is intangible Services are perishable Services are heter

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: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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