QUESTION 7

1. Assume now that the WP decided to focus only on the production of papers. Another firm (lets call that firm Ralph) will be responsible for selling the papers to the customers. If the production cost of each paper is $0.25, the wholesale price (i.e., the price that the WP charges Ralph for each paper) is $0.6 the retail price is $1 and the demand is normally distributed with mean =500 and standard deviation =10.

   Ralph and WP want to use a buyback coordinating mechanism. Which buyback price, b, would maximize channel profit (i.e., which buyback price would coordinate the supply chain)?

   		$0
   		$0.75
   		$0.47
   		$0.53
   		$0.25

QUESTION 8

1. Eatzis flies in Italian dry sausage regularly to satisfy a growing demand for this product in Fairfax. The demand for sausage is pretty steady at 175 per month. The unit purchase cost is $1.85 (i.e., Eatzis buys each sausage for $1.85). The fixed cost for each order of sausages is $200. It takes 3 weeks to receive an order. The holding cost equals 27% of the unit purchase cost per sausage per year (assume 12 months per year and 4 weeks per month).

   How many sausages should Eatzi's have flown in per order?

   		374
   		195
   		1,297
   		131
   		674

9.848 points

QUESTION 9

1. Eatzis flies in Italian dry sausage regularly to satisfy a growing demand for this product in Fairfax. The demand for sausage is pretty steady at 175 per month. The unit purchase cost is $1.85 (i.e., Eatzis buys each sausage for $1.85). The fixed cost for each order of sausages is $200. It takes 3 weeks to receive an order. The holding cost equals 27% of the unit purchase cost per sausage per year (assume 12 months per year and 4 weeks per month).

   How often should Eatzis have orders flown in?

   		Every 3.85 months
   		Every 7.41 months
   		Every 0.75 months
   		Every 1.11 months
   		Every 2.14 months

9.848 points

QUESTION 10

1. Eatzis flies in Italian dry sausage regularly to satisfy a growing demand for this product in Fairfax. The demand for sausage is pretty steady at 175 per month. The unit purchase cost is $1.85 (i.e., Eatzis buys each sausage for $1.85). The fixed cost for each order of sausages is $200. It takes 3 weeks to receive an order. The holding cost equals 27% of the unit purchase cost per sausage per year (assume 12 months per year and 4 weeks per month).

   How many sausages should be on hand when an order is placed?

   		374 sausages
   		350 sausages
   		175 sausages
   		1,297 sausages
   		131 sausages

9.848 points

QUESTION 11

1. Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week. The new manager desires a service level of 90.32%. The lead-time for procurement of ice cream is 2 days (or 0.29 weeks), and the dairy is open seven days a week.

   What is the safety stock that the new manager will have to maintain?

   		2.450
   		9.10
   		3.185
   		6.435
   		1.30

9.848 points

QUESTION 12

1. Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week. The new manager desires a service level of 90.32%. The lead-time for procurement of ice cream is 2 days (or 0.29 weeks), and the dairy is open seven days a week.

   Determine the reorder point that would be consistent with the desired service level.

   		Approximately 7.8 gallons
   		Approximately 9.45 gallons
   		Approximately 8.54 gallons
   		Approximately 44.45 gallons