Question

Bruno Fruscalzo decided to start a small production facility in Sydney to sell gelato to the local restaurants. His local milk supplier charges $0.50 per kg of milk plus a $21 delivery fee (the $21 fee is independent of the amount ordered). Bruno’s holding cost is $0.03 per kg per month. He needs 9000 kg of milk per month.

**Round your answer to 3 digits after the decimal point.
Do NOT use comma in your numeric answers.**

If Bruno’s storage vessel can hold at most 6000 kg of milk, then Bruno should order _______ kg each time in order to minimize the annual ordering and holding costs. The minimized annual ordering and holding costs will be $ ________.

Bruno’s supplier offers a 5% discount when a customer orders a full truck, which is 20000 kg. Assume Bruno can store that quantity and the product will not spoil. If Bruno orders a full truck, then the annual inventory holding cost will be $ _______ per kg, the annual purchasing cost will be $ _______, and the annual ordering and holding costs will be $ _______.

Answer #1

Bruno Fruscalzo decided to start a small production facility in
Sydney to sell gelato to the local restaurants. His local milk
supplier charges $0.50 per kg of milk plus a $21 delivery fee (the
$21 fee is independent of the amount ordered). Bruno’s holding cost
is $0.03 per kg per month. He needs 9000 kg of milk per month.
Round your answer to 3 digits after the decimal point.
Do NOT use comma in your numeric answers.
Suppose Bruno orders...

Bruno Fruscalzo decided to start a small production facility in
Sydney to sell gelato to the local restaurants. His local milk
supplier charges $0.5 per kg of milk plus a $25 delivery fee (that
is independent of the amount ordered). Bruno’s holding cost is
$0.02 per kg per month. He needs 9750 kgs of milk per month.
a.Suppose Bruno orders 9250 kgs each time. What is his average
inventory (kgs)?
b.Suppose Bruno orders 7000 kgs each time. How many orders...

Sarah’s Organic Soap Company makes organic liquid soap. One of
the raw materials for her soaps is organic palm oil. She needs 500
kgs of palm oil per day on average. The supplier charges a $55
delivery fee per order (which is independent of the order size) and
$5.5 per kg. Sarah’s annual holding cost is 15%. Assume she
operates and sells 5 days per week, 52 weeks per year.
a.If Sarah wants to minimize her annual ordering and inventory...

Question 2 A car engine manufacturer has the
following production goals for the next year:
Engine
Quantity
Machine Req’s
V6
2000
6hrs
V8
1500
10hrs
V12
100
20hrs
If all three engines can be produced by the same machines and
each of the manufacturer’s machines operate for 2400 hours per
year, how many machines are required for the above product mix?
Question 3
A manufacturing operation has three stages:
•Stage 1 Capacity: 400 units/hr
•Stage 2 Capacity: 300 units/hr
•Stage...

1. The use of a production smoothing
strategy creates inventory for products that experience a seasonal
fluctuation in demand. True or False ?
2. Companies belonging to the same
industry segment should have the same inventory
turns. True or False ?
3. Which of the following is a work-in-process inventory for
C&A Bakery?
A. Flour
B. Cupcakes freshly out of the oven
C. Ovens
D. Cupcake mix prepared from scratch
4. C&A has on average $6000 in inventory and its daily...

QUESTION 3
HIT Co demands 120,000 units of cogs a year. Every month, the
company pays £200 to place an order with its supplier. Each cog
costs £7.50 and the annual holding cost is £1.00 per unit. The
company maintains a buffer stock of cogs, which is sufficient to
meet demand for 10 working days.
Required:
a) What is the annual cost of inventory for HIT under the
current ordering policy?
b) Ignoring the bulk discount, what is the optimal...

The owner of the Beachcomber Hair Salon in Galveston, Texas,
orders bottles of professional shampoo from a local beauty care
distributor. Based on the store's popularity, the owner is
considering adding two more chairs to accommodate more customers
each day. To make room for the new chairs, however, the owner must
reduce the size of the storage area used for all of the supplies.
Specically, she estimates that there will only be space to store 20
bottles at a time....

Assume you are the management accountant for the Foleo Group.
Tracey Chen, the CFO, has called you into a meeting, to discuss the
performance of the Warehouse Manager of the Foleo Fones business
unit in managing his inventory stocks. After his last meeting with
the Production Manager, Allan Raymond, the Business Unit GM, has
supplied Tracey with below data relating to the inventory
management practices for the current year. Tracey asks you analyse
this data and before her Board meeting...

Palu Gear is mountaineering gear retail store operating in
Northern Colorado. From its humble beginning of one store, the
chain has expanded to 5 stores spread across the area. The most
popular items sold by Palu Gear is an in-house designed hightech
"Palu jackets". These jackets are sold throughout the entire year
and their demand is not materially affected by time of the year.
Annual jacket revenues for each store were of similar size and
amounted to roughly $1,000,000 per...

Palu Gear is mountaineering gear retail store operating in
Northern Colorado. From its humble beginning of one store, the
chain has expanded to 5 stores spread across the area. The most
popular items sold by Palu Gear is an in-house designed hightech
"Palu jackets". These jackets are sold throughout the entire year
and their demand is not materially affected by time of the year.
Annual jacket revenues for each store were of similar size and
amounted to roughly $1,000,000 per...

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