Qat1

QAT1 Cohort Task 3 Problems

1. Judith Thompson is the manager of the student center cafeteria. She is introducing

pizza as a menu item. The pizza is ordered frozen from a local pizza establishment

and baked at the cafeteria. Judith anticipates a weekly demand of 20 pizzas. The

cafeteria is open 45 weeks a year. The ordering cost is $15 and the holding cost is

4% of a $10 pizza per year. What is the optimal number of pizzas Judith should

order and what would his total annual inventory cost be (holding cost plus ordering

cost)?

2. Andre Candess manages an office supply store. One product in the store is

computer paper. Andre knows that 10,000 boxes will be sold this year at a constant

rate throughout the year. There are 250 working days per year and the lead-time is

3 days. The cost of placing an order is $30, while the holding cost is 10% of the $15

box value per year. How many units should Andre order each time and what would

his total annual inventory cost be (holding cost plus ordering cost)?

3. The Handy Manufacturing Company manufactures small air conditioner

compressors. The estimated demand and production rate for the year is 12,000 and

24,000 units respectively. The setup cost for the production process is $200 per run,

and the carrying cost is 10% of the $10.00 unit per year. Determine the number of

units to produce in each batch. (The problem assumes 240 operating days.)

4. Jack Spratt is the production manager for a manufacturing firm that produces wizzygadgets and other items. The annual demand for a particular wizzy-gadget is 1,600

units. The holding cost is 12% of the $2 unit per year. The cost of setting up the

production line is $25. There are 200 working days per year. The annual production

rate for this product is 16,000 units. How many units did he produce each time he

started production of the wizzy-gadgets?