The local supermarket buys lettuce each day to ensure really fresh produce. Each morning any lettuce that
Question:
The local supermarket buys lettuce each day to ensure really fresh produce. Each morning any lettuce that is left from the previous day is sold to a dealer that resells it to farmers who use it to feed their animals. This week the supermarket can buy fresh lettuce for $6.00 a box. The lettuce is sold for $18.00 a box and the dealer that sells old lettuce is willing to pay $3.60 a box. Past history says that tomorrow's demand for lettuce averages 254 boxes with a standard deviation of 37 boxes.
How many boxes of lettuce should the supermarket purchase tomorrow? (Use Excel's NORMSINV() function to find the correct critical value for the given ?-level. Do not round intermediate calculations. Round your answer to the nearest whole number.)
1. Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.
a. Determine the order quantity and reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given ?-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
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Optimal order quantity | units |
Reorder point | units |
b. Determine the annual holding and order costs. (Round your answers to 2 decimal places.)
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Holding cost | $ |
Ordering cost | $ |
c. Assume a price break of $55 per order was offered for purchase quantities of 2,000 or more units per order. If you took advantage of this price break, how much would you save annually? (Round your answer to 2 decimal places.)
Annual savings $
2. Demand for an item is 1,700 units per year. Each order placed costs $8; the annual cost to carry items in inventory is $3 each. In what quantities should the item be ordered? (Round your answer to the nearest whole number.)
Optimal order quantity units
Operations and Supply Chain Management
ISBN: 978-0078024023
14th edition
Authors: F. Robert Jacobs, Richard Chase