Petronella, the operations manager at UNI-ESSENTIALS, is excited with the reopening of Colleges and Universities after Government reviewed its Covid-19 measures. UNI-ESSENTIALS supplies gourmet jams and jellies to cafeteria located at a number of universities. It also orders Souvenir Calendars with higher education themes for sale to colleges and universities students. Petronella is reviewing the two lines of business stock strategies in order to streamline costs considering the financial impact of Covid-19. You have been requested to help Petronella make important decisions in this respect by considering the following. 

(a) UNI-ESSENTIALS uses approximately 24,000 glass jars each month during the production of gourmet jams and jellies. Because of space limitations, UNI-ESSENTIALS orders 5,000 jars at a time. Monthly holding cost is $0.08 per jar, and the ordering cost is $60 per order. The company operates 20 days per month for this production operations. i. Is UNI-ESSENTIALS being cost efficient by its present replenishment policy? 

ii. UNI-ESSENTIALS would prefer to order eight times each month but needs to justify any change in order size. How much would ordering cost need to be reduced to justify ordering eight times each month?  

(b) UNI-ESSENTIAL needs to order Souvenir Calendars in advance of the beginning of academic year (sales are good when first years come, and this is the season Petronella focuses on). Based of past seasons, Petronella has determined the probability of selling different quantities of the calendars for a particular academic year as shown in the table below. UNI-ESSENTIALS sells the calendars for $12.95 each. The calendar is ordered at a cost of $5.00 each. The salvage value is estimated to be $0.05 per unsold calendars. Determine how many calendars UNI-ESSENTIALS should order to maximize expected profits. [HINT: Present your answer in table with the following columns- order quantity, income, cost of calendars, loss of unsold calendars, and profit)

Demand for Calendars Probability

75,000    0.05

80,000    0.20

85,000    0.25

90,000                        0.30

95,000                        0.20

Answer rating: 100% (QA)

Answer Stepbystep explanation a i Monthly Demand 24000 jars Order Quantity 5000 jars Monthly holding cost per jar 008 Ordering Cost 60 i Optimal order ... View the full answer