Item

Vslufeor
Cost Unit (Unit
$I00
60 s0 15
Volume
Annusl
Annual Cost*Aanusl
(00) VoumeAnnual
(00)
70 10 60 30
VslueDollsr Volume)
2,400 $2,500
12,170 S100 T70 S00 900

esch
item
and
st
the

Find Itent hwatigondetecrmmeTiN, itcms

nd uniday.ts
FiD=18000year, the p=4,500,
2DS economic
the 2DS E0Q
S= SS,100 ValueDolAnnual
lar (ond Io n
12,170 S0Q 90 2,400 2,500 sxenting
de
(wund $36, 70 wo the
S= 2(4,500 )36 to and Category percentage
devmals)
production $100, 10 an H= B A rdcr
2(18,000)(100) H= integer $10. hsed
of
quantity S40 units
180 = Pereentageof tems
40 value): (36)°100) (6 (V6)100)
100) 33.33% 16.67% Items n
per 100.00% S0.00% andAnual
13-7 (EPQ) nit the
(oli
percentage
120-90 per ar
(round year, 100) (35,100S12,1
70)°1001 Percentage
Annual of
120 1001 (S4,900/S12,170)*
($2,170/s12,170) Dollar
Value
Valwes
to p= 4|,91% of
40.26% feterm1ne
Anua
=600
units an 120 100.00% 17.83%
integer units Doilar
the
value): per Value A,
day, B,
and for and
y
=
90
 Given: a.
sample volume
The
following
of
16
items. table
Develcontop ains
D48 D45 F99 F95 F14 ZAS M20 M10 K36 K35 K34 Item
PO9 POS NO8 D57 DS2 figan
ures
UnitCost A-B-C
on
10 16 30 40 15 12 10 20 30
20 80 20 16 36 25 $10 items: the
classification.for
monthly
300 200 150 600 200 Usage
30 500 40 120 110 90 550 60 800 80 25

these
and
unit
costs
for

a
random

indivDetidualermine Step I:

Annual the
Annual
Dollar
Z45 M20 M10 K36 K35 K34 Item Dollar
PO9 P05 NO8 D57
DS2.
D48 D45 F99 F95 F14 Values.
Usage
Uni
Costt Value
36 25 $10 (Unit
20 30 20 80 20 16
10 16 30 40 15 12 10
Cost
150 600 200
13-9 550 800 300 200 80 25 *
110 60
30 500 40 120 90 Usage)
Annual
Dollar
Value
15,000 $2,000 for
24,000 6,000 16,000 1,600
5,500 1,200| 400 5,400|
94,130 8,000 1,200| 4,800 1,650 1,080 each
30
itern
and
the
sum
of
the
 Given: b.
Determine

PO9 M10
Value Arrange
and itemsthe Step 2:
D48 NO8 M20 D52 K34
an D57 K36 D45 FI4 Item
A-B-C
POS K35 z45 F95 r C
foitems.
94,130 each
300 400 1,080 1,200 1,200 1,600 1,650 2,000 4,800 5,400 5.500 6,000 S24,000 Dollar
8.00015,00016,000
classif+cation VslueCategory Annus categoryThen,
5,000
4400 30102,000
6850 4050 9280 6500 4066 9402 4021Usage
Item determine
descendirng
(round Values.
order
B A
13-10 400
80 10 150 30 300 90
for tothe
the (8/16)*100]50.00%|[($29,700/$94,130)*100) Percentage two
percentage
100.00% [(S/16)*100] [(S55,000/$94,
following 31.25% [(3/16)*100]
130)*100]
$1,400 UnitCost
18.75% Items decimals). based
1,020
5 20 10 140 20 700 12 e on
of
items: of] items
[($9,430/$94,130)*100] Annual
Percentage
and
Dollar
100.00%
10.02% 31.55% 54.83%
theDollar.
Value
percentage
of
Annual
Determine
of
Annual

Dollar the
A,
B,

C.
tablecategory.
Reference
above. Determine Value Dehe and Step 2:
6500 9402 3010 9280 4050 6850 4066 4400 4021 Item individual Step l:
foritems. C Determine
the each
228,000 $126,000 Dollar
Annual descending
Then, itemsin Annual the
percentage 3,000 3,600 8,00010,20011,20020,00021,00025,000 category 4400 3010 6850 4050 9280 6500 4066 9402 4021 Item Annual
Value determine
Dollar
of Category (round 5,000
400
2,000
300
UsageCostUnit Dollar
items 80 10 150 30 90 Values
B A the
toorder Value
in peroentage
two $1,400 (Usage
13-11 each ($36,000/S228,000)*
|(S/9)*100]|100] 1,020 700
Percentage 20 10 140
55.56%[S126,000/$228,000)*100]
[(/9)*100]|11.11% based 20
100.00% [S66,000/$228,000)*
[(3/9)*100]|
100]33.33% Itemsof decimals),
category *
ot on Annual
Dollar Unit
items
Annual $126,000 Cost)
228,00025,000 Value
10,200 3,00021,000 3,600
and
Percentage
Annual of Dollarand 8,00020,00011,200 for
the Dollar
Value the each
annual 100.00% 28.95% S5.26% percentage
Values. item
15.79%
and
dollar Determine the
of
Annual sum
value
of
for Dollar
the the
each A,
B.
 3.

e.
d. c. b. decimals.
a. $75H=$10S= Given:
D=1,215
Note:
Increase TC
=( New Assuming
cost? Determine
TC-Carrying Determine
9 D pDetermine Determine
Tc I2 Round
-+Gs=(cost
in |2(1,215)(10) S75 that =()
H= bags/
orderorders
bags67.5
the
18 1.215
the
=18/2
=9 the
2DS
the the
bags
per

$1,428.71
=
84 +
$9holding +s cost total
+
number bags average
2(1,215)10
EOQ: EOQ
to
year

$84.
=
Ordering cost 75 an
bags=17cost of inventory: integer
-$1,350 =(75+()10per
ofordering
cost
orders
- value,
bag per 18

13-12 +(10=
$78.71
=
increases
carrying
and year: bags
round
but

by
per flour: any
$9/baglyear, =
year
$714 $675 other
valuesto
+
$71471 + what s675
would = two a

$1.350 maximum

$1á2871 = happen
of
to
total

Note: 40/dayGiven:
a.
$60.S=D=
H=$30.
A
b.
deci
DeterminEO0:ethe
mals. Round
$6.120 Determine Ves TC-CarryingDetermine lo
H
annual 2DS x
- maximumtwothe 260
S6,118.82 the
ordering
total EOQ days/yr.
cost

=
+G)s-(0+
total
cost and Ordering
+
cost:|2(10,400)60
integer
to
an
10,400
=
$1.18 for carrying
30

higher = cost value, boxes

200 203.96
costs roundbut
per and (10,400
year always 204
200 compare =
204 otherany
for are 60
Q= 60 to equal
boxes
=
= current $3,060
200(this $3,000 values
at
total the + to
should $3,120
+ EOQ $3,058.82 a
cost:
be (except
acceptable). $6,120
= = of
when $6,118.82
rounding).
 5

b. decimals. Note: C=Given:

$20S=D=750
S570-Determine Step 4: Determine Step 3: H Determine
EOQ. Step 2: Determine Stepl:Determine $2.
The
benefit $464.76 ro-(*s=)
2DS
lo Round
the (.30|$2)
pots'H
mo.
of annual total total the
= additional E0Q x
using cost cost - 12
$105.24. 2(9,000)20
the
savings for
.60
for $.60'toan
unityearmo./yr.,
E00 annual integer
from =
is
775. = 1,500. 9,000
that using = cost value,
774.60 +1.500 ,60 pots/yr.
for but
about the (,000)20 =
13-14 9,000 using round
EOQ. =775
one )
= any
half pots 20
1.500: other
of $232.50 =$450
the values
storage
+ $120= + to
$232.26 a
space maximum
$570
would $464:76
=
of
be two
needed

decimals. RoundNotH-e: .35($S=$10)==9,6Gi0080ycl:

28 D=12*
Savings TC
Determine Step 2: DelercurminrentcosSttep 1:
per |2DS
year EO0, the
$3.50
EOQ
from total monttoht).al
2(9,600)28
3.50 cost
to per
using an crate
for for integer
per
EOQ=S1,736-S1,371.7l 391.92 =
EOQ, 3.50 + 8000=
value,
year
and
(the
392 9,600 = annual 800(9;600 but
392 manager round:
13-15 savings | 28
28= crates any
=
$1,400 orders
other
$686 fom
= onceper valuestoa
$364.29 +
+ usingthe $336
$685.71
=
EOQ. $1,736 maximum
=$1,371.71

of
two
 7

C. b. The Given:
a. Demand
Monthly TC(Q=74): d=
Monthly six-month
period:
First either units If We D=
six-month
Second
period: First Note: period:Assumianng monthly
d=
six-month
period:
GJ+)s=2.00
TC(Q=100):
Monthly With
discount
monthly
six-month (e.gvendor
.,
the
ca n monthly
2dS
monthly order
We size projecta
is
TC use 2150)55
2dS_ holding
50, H. wil that
demand the demand demand that
(Q=
of 100,willing is EOQ solve montwil hly
50): $10, period? 2(100)55 cost to be
150), 2.00 2.00 = this
=600/6= only =900/6 minimizedemand is600
S= to 600/6 $2
2.00 If
would offer if problem per units
$55-$10 so, demand =90.83uni=9lts =
74.16=100&H=
+(45 +)55 (100 100,
what you a
discount 150&H=
=
using
the
wil
unit, for
100 = sum be and the
orderadvise is
13-16 =$45: H=$2.00 level 74
mont
periohd.s, level
of itfirst
45 size the of units $2.00 ordering costs half
= $2.00
$50 =
= $74+ $10 (stable). during
$100+ would
manager per ratheras an of
per per per the
and cachestimated year
$90 + $74.32 uni t youorderfor uni t unit than a
$45 per carrying
costs
for
six-month
perrecommend? to per and

$140 = = month, take month. year, $55 900

=
ordering month.
$145 $148.32 advantage to
period, processanunits
the enime,ted
S= for
$55, in each r
multiples
of the
& the six-Month order.
second
EOQ=14. offer
in of
50
half

Monthly Secondperihod: during

Monthly tmsiontx-Mont
d= MontTC(hØly=150):
(Q=150):
MonthlyTC TC(Q=
Month100)ly : With TC(0=91): hly Concltuhission: =
F-45 Conclusion:
during
J+s-()200
this
A+s=(2.00
six-month
Yes,
a-G)s-G2o0 + diTC
(0= of
scount
demand s0X-Morith Yes,
the 100\ 50): $10, the s=
150) =
period.
manager S= 900/6150, = periomanager
d.
$55- 2.00
should
+50)45 (150\ +700)45
should+50)45 (100
(150 $10= 91)55 $91 =
]45'= H=$2.00 ), take
13-17 take $45:
advantage =
advantage =$150
$150 =
$50
$100 +$135 +$90.66=$181.66 per

$30 +
unit of
of $45 + $67.50 + per the
the $185
= month, offer
$180 =
$195 =
offer and
and $167.50 = S=
$55,
order
order &
EOQ 50
=100 units
=91.
units
 8

H= Given:
Cur Coni
re4,
nt0 p
00any
= d=27,
$60S= 000
decimals. Note: $0.18
Determine Stepl: What Round
Determine Step2: operates per jars
Conclusion:Penalty Savings Tc penalty the jar per
=)H+5)S=(.18
month
per
2ds
EOQ, current
monthly
the
is EOQ
to days
20 per mmonth
month
|2(27,000)0U4,242.64= 4,2ja43rs total company an a
integer month
from 0.18 cost
from for cost incurring value,
placing using 4,243
EO0,
0.18+|
for
E0Q= = by but
orders and 4,000. its round 1
$765 monthly (27,4,000000 present
of +a243)(27,000\ any
13.18 -$763.
=
68 savings 60 order other
4,000 = values
60 $360 size?
$381.87 =
= = from
$1.32 $1.32. to
using $405 + maxXIMum
a
per the
$38131 +
month. =
EO0. $765 of
tw

981 = Tb.
he

Using daoryd? eringjuthsetifmanager

the If ysize.ise
(Q=2,S7erT00)C
S=$52.ThiS=$522/
s 20 10 10S $243
the
is =
$765 10S
+ manager currentthe othercoschangeWht. at any would
or(round
der - = orders
$243 $765 in
prefer
cost to ordering order
= Q=4,
=$765.
000,
$765 10
that two times ordering
and , cost
deciwoulmdals). solve per total
would One 10
enable )0.18 month, monthly possibilitytimes
+00)S=$765 for enable
S: each
the (27,000\ Q=27,000/
10=2,70.0 cost
manager simplifymonth
to
13-19 manager
(every
to to
ordering
justify
every order
justify other
processingtoday)
ordering
but
would
everyreduce
other have
the
day. to
 9

Days C.
to b. a

: H= FactD=
$66S= ory
0yp=4,812/5,0=0.00da96ys DIQ,= Number Find Notevalues hotdogs/ddayogs/000dGiven:
u=250
hotp=5, ay
$0.45 250
the Round per operat
300 es
*
produce75,000/4,812 of 2DSP optimal
runs hotto,dog =
the per 75,000 300
an
run per days
optimal 15.59
= year: size: integer year hotdogs
per
run runs value, year
quantity: per
2(70.5,4500066 but
per
year
13.20 round a
year
V5,000250 - any
5,000 other

=
4,812.21 to

maximum
=
4,812
of
two
hotdogs deord

$25:S=
e. d. C. Isb. $100S= u=20 pounds10
Note: H=100pounds
a.

40D= ThechemicalGifviA
ren:
m
capacity
Vp-u
,H Runs Run Inventory=
Average Vpu H
, $5 50tonsdp
aey
r * firm
savings 774.60 TC(S = 387.30
$100) TC(S Round per bags tons =
per length
-(p-)= 2DS P ton per per per operates tons50
+ = p
P per bag day bag
|2DS P year: g,
when 774.59 + 387.30 $25)Y(p-a)= = to per 200 produces
days a per 20

(=025 =+
S=
$25 = =
10,328 2 D
80,000
,_10,328
1,000 1,00010,328
integer
anyear
=$5
day =400 * 2,000=
20
* 2.000 1,000
bags pounds
days pounds bagspedary
100-pound
=2,000
Setup
$100,
year.
day.

$1,549.19 $774.60 1,000 valuesbut per

value, per
= |2(80,000
)100 ton per cost
ay per per Note: Demand
(1,000- 2(80,000)25
-10.33
days 6,196.28 -(1,000 d
$1.549.19- 0.25
=7.75 0.25 per year ton=100,000
ton=
bags.
=
round
otherany year
=80,000 ton I
runs .=3,098.4
bags 400) 40,000 and
400) 20/
V1,-400
000
13-21 $774.60 per =6,196.8 bags storage
=3,098.V,4000-400 1,000 bags pounds pounds thfeor
year 1,000 tonper = per
pounds.
- and
$774.59 bags =10,327.97 year per per handingproduct
bags to day day
=5,163.
=5,19bags648 S0.2pe5r
per 5,1(80,000
64 maximum =
40,000 100,000
=
year. \10,328/80,000\ bagper
coststons

|25 = = poundspoundsper =
$5per r
100 = 10,328 of
two year per day.
per ton The
bags decimals. dayl day yeal.
a
/
 11,

The d. C
b. Optimalrun a. D=20,000 200davp= S300S-
takesGiven:
u=80/day $10.00N= ready
Conclusion:
10 Pure 17.68 Cycle
Plugging TimneRun = Cycle This fotakes
r ti m e is values
Note: Assembly
days, Cycle the consumption How product Average ImaxAverage Days to ,
days Time is manager e,1,414-1.07 days
= Round , for
Consumption
which Time the Time newlonger when much and a
in amount 200 produce Vp-u H (250 production
There =8.07 values = =
time product.
than time ti m e Inventory
needswould (p-u) 2DSP=
.39
is Run p
Run between = inventory quantity todays place
is
days Time
will days Time and
Setup
+ Time 2_1, 4 14 the fo
availabler
minimum =(200- a
like inventory:
of th e
integer *
an
run days 5
not solving
starting 80 pure ofthe = optimal to S0/day)
(10 be = + +
Time + consumption component th e to mu
2 minimize of
-9.61) Pure Pure Pure 17.68
days = to run 2(20,000 )300 value, the a
enough17.68 for component fo r r un
Consumption=t1=
Consumption Pure Consumption production run of
another
10 848.24 but
componcnt weck,
1,414 th e quantity:. 10 total
13-22 days time
8,07Consumption for days424.2units = 80) round
50
time, we otherjob? job
too to the per 848.4units = annual wecks
year. a
=9.61 runs between any fo r
many. run the new cycle 200 V
7.07 of new 200 costs: the
the Time Time Time wi
runlproduct. The - other
other days the (including runs
ne w
Time: + component product job 80 It
1= out The must =1,414.2l
=1,414
units product. wil
job ofthe
because 8.07days of falls end be setup) to takea
inventory component a
for finished
to of maximum full
the the Othe for day
units.
other new of pureduring the to
tconsumption
he If other for ftwo of get
joo product. component the the the
to4 other the iob: new decimals.
pure machine
job

TiRumne CyclTime allow The We Increase2)the

The
additional1,466.77 = 4,400
= 30= 4003ep_ Qpp=1+10
4,40030,11(400) Using 200 80
400 50,20
=
80 Cvcle
Plugging
200/day, the Purc know
incrDeterminc the
e asc Reduce3)
betw ecn
ru ns, Try
Th)re
3 11 400 the 200 Time
in ot her the totalin options
to
11
least
+1|+10 values
Run
= u
=
Consumption
job following: additional
thrsieunze rtuhneshorten that
units = common 80day, Setup annual
Time + to i.c.,run the thec the
per 1,467 Tlme and be quantity
component
sctupmanager
run denominator: solving and run.Time costunits
: jtoheb.of
units +
= Pure Pure for fromtnehwis componcntofthetimeof
to other could
1,467- for the produce
Consumptlon Consumption
Q,: component
component
consider
13-23 1,414 of often.
less
the
= for that
53 for Component
Time Time the thfoer wil
units the
= new
new allow
per 10 product new
days. product for
run. the product. this
new to otherjohto
must allow
product
equal a
longerperformed: be
10 and
daysto the time
 12.

inventory:
Average C. b. a.Company
Inventory
Average =
Q=2,000u=300p=800 Given:
Buildup TotaCurent
l Inventory The ThAmount
e 75,000Number
D Increase = =
4,242 TC(Q Q-1,414: TCQ ImarQ=1,467: Inerease
4,401
numbernumber units
inventory
after inventory 2,000 operates units units = +4,089.98 = (p=
build inventoryof of per per $8,490.98 = 1414) +
2
Days after
of of
=37.5
batches per
250 batch day day
4,2 43. 28 1467) - total
in

upunits units
u)
800 2,000 ofthe the
ofafter
the
used
produced after batches heating
of days -=+)s= -(5)s
=
S8,485.28$8,485.28
= =
cost:
Imax2
-(800-300)=
11250
units Production firheating
st in 2 year a $8,490.98
2 first days 2 indays per elements (200
1,250 days unit 2 2 year
days of = D
2 =-0 of days)=(2 days S5.70 80)
13-24
+ =0 of production:
production per
=625
units 1,000 units
production
days)(800
=
(2 year: per
year
848.4) ()10.00 880.880.2=+2units =
= (300
1,000 = 10.00 +
Beginning units
=
units. 1,6units/day)=
00 per
\1,414) (20,000
-day) 20,000 1,467)300
Inventory 600 =600
=1,000 1600 300
+ units units
Inventory units

d.

coconsmponeumptnt iofinnished Homucw helements? days. other

This CyclTime e heat
element
ing . 0.5 The
Conclusion:
component Pure 6.67 CvclPluegging TiRunme = Cvcle is
days Time Time the during Is
Consumption in time takes time time component
there
= values = the
requires There 3 =
Run
Y+ Run between longer is enough
days+ puravailable
e requires
Setup 2,000 when
Time and Time 300
4wil Time than component
time
days, not Pure solving starting consumption
inventory to
+ Time + days
6.67 the run
to 4
Pure run days
which 6.67-3be = Pure for production pure the
= the
(including
enoughCoTSumption time
is Consumption Pure Consumption
800 2,000 consumption the
of other other
.3 time endfor
(4 = Consumption +.5 runs
element
heating
component?
the r setup).
-3.67) runto3.67 Time =2.5 of time, heating
13-25 days
Time Time the Setup
days the Time: +.5=3 heating element.
wefalls The other
The between
time
to0
other wil
elerment. to
run component batches for
componentbmany.ecause days
outunits.
O the
of heating
of
inventory the Ifpurthe of heating
must element
other
be
the
other the of =
 b. Buxes eFrce
Namder
Sterl: S,10,CCC-9,
G00 2.C99900-4Sg9
L.CCO-S99
COSts.
Determine
Conclusion: TC1,000 = TCs00
QDetermine
D_18,000 TC400 Step 2:This Compute Determine
optimal
the Scheuie.
quantity 2DS
5,000
2,4200 total the
number 10,000 5,2000
=3.6 Optimal 2 is common
cost feasible
orders of
-(.60) + (.60)+. (,60)+: 2(18,000)96 Prie
for .60 minimum
orders order order SI.10 SL.1S S1.20 $125 per
10,0018,000 5,000 18,000 18,000
2,400 the in
per quantity common the Box
per quantity
year(round -(S96)+ range =2,400
boxes point.
($96) -($96)
year: +S1.10(18,000)
==$22,972.80 (P)
= minimum2000-4,999. (round
13-26 5,000 +$1.15(18,000)$1.20(18,000
to to
a boxes. an
maximum point
integer
)= and
=$23,040 for value):
two of
decimals)
$22,545 the
price
.60
breaks

of
all
Jower
imi

j4

a. Schedule.
Number Price $48 S D
25
b. This Compute Step 1: H= 400-599 1-399
600+ stones
=Determine Step 2:quantity 25,-(2DS00 -48
COSts. of
Minimum Beginning
find StepI: Conclusion:
H= =)2+ TCgo )+s+PD
TG490 TC Determine
$2.
Stones| day
VH the
|2DS 30%
a
feasible =)2+on48+9(5,000)
with
600) of
total
cost feasible
is common
fhe
Prie
daysyeat
200
point unitOptimal per
2(5,000)47.21 minimum the cost for 2 mn1mum optimal S15
30(8) P=
(5,000 the in Stone
lowest (5,000N the 5,
S8: order 600 common = order (P
point. unit range 489.9] poin
quantity 48+ quary. stonesyezr
-447.2 400-599.
price, minimum =
=600 8(5,000) 490
=447 compute sones
point
13-27 stones. = =
Not minimum $41,000 $45,979.80 and
feasible for
the
points price

for brcaks
each
of
price ail
lower
range
unt
until
you
 ROP Conclusion:
Lead TCs00 = TC422 Compare Step2: |2DS Minimum
time=6
=
25 =(30
stones/day 42 the point
working Optimal total |2(5,000 48
30(9)
(30* P=
cost
*6 order $9:
days
days. 8) +
9) at
Determine
=
+(s0048 (5,000
quantity+(248+9(5,000) 42 = 421.64 =
150 5,000
to =
stones. = 422
13-28 600
ROP:
+8(5,000) =600.
stones. Feasible

= =
$41,120 $46,138.42

a
Beginning ice D=4,$50S=
Schedule:
PrH=40% 900Given:
P=$5.00:
Minimum
point |2DS Minimum
VH |2DS Minimum
VH 2DS Minimum feasible Stepl:
|H
|2DS 6,4,0000-+
00-5,1,909900-3,999 1-999 Range
pointminimum with of
point.40(4.90) V point purchase
|2(4,900)50
40(5.00)
2(4,900)50
40(4.95) 2(4,900)50 40(4.85)|2(4,900)50
P P the
P = =
$4.95:
=
$4.90: $4.85: point.lowest Price cost
feasible
=500Not =502.57 unit
= 497.47
= $4.85 $4.90 $4.95 $S.00 per
494.97 pnce, Unit
= (P)
= = 503 compute
495 497
Not
Feasible Not
13-29 feasible minimum
feasible
points
for
each
price
range
until
you
find
 different.
Conclusion:
TCso0 TCA,=(40»5.00)
000 = TCio00 = TCa9s + TC
=Compare
Step 2:
=(40
1,000) the
Optimal
total
cost
order 4.(40-90) + 4.(40*95) at
quantity 4.85) (
=
495
13.30
495
=l6,000. +|l4,000(4,900)+(,000
(4,900) /4495,90a) to
nits.
90 )50+ =
50 )50
s0 1,000,
+ + 5.00(4,900) =
4.85(4,900)4.90(4,900)4.95(4,900) +
Note:
4,000,
The
&
total 6,000.
= == $25,489.95
$29,625.83$27,991.25 $25,490 =
cost
for
l,000
units
is
only
$.05

16

40 GiD=
Price 25%H=$S=
aSupplier
Beginning cost.
Conclusion: TCs00()+6)s+PD
42 TC=
Compare Step2: V
Minimum
H V.25(13.60) H
2DS V
|2DS
Minimum feasible Step1:A: We
need
Price ven:
80
=(2513.80) 7500 the point pointminimum with to Schedule S00+200-499 1-199Range
350+150-349 1-149 Range
Schedule of 12 *
172
|2(9,600)40 find purchase =9,600
Optimal |2(9,600)40
total .25(13.80)
P P the the
)(25 cost =$13.80: =S13.60: point.lowest optimal
Supplier Supplier
order13.60) at Price Price cost
= :471.81
Feasible
=472 =475.27=475
feasibNolet unit
quantity S13,70 S13.90 S14.10 per
B:
S13.60 S13.80 SI4.00 per A:
quantity 472 price,
+(40+500(9,600+(40 to Unit Unit
from compute for (P) (P)
= each
500.
13-31 Supplier
+ minimum supplier
13.60(9,6A:00)13.80(9,600)
500 and
points
units select
with = = for
supplier
withhe
$132, 718$134,107,76 each
TC=
price
$132,718. range
minimumthe
until
you
find
 Conclusion:Compare
Conclusion: TCaz4 Compute Step 2:
|2DSP=S13.70:
Minimum
poinminimum
t feasiblc a
point. Supplier
Beginning foStr epl: B:
total =(25" total
Optimal (474)
cost Optimal cost 2(9,600)40
.25(13.70) with
for the
order for
order lotvest
= 13.70) =474.
quantity 500 quantity =
473.53= unit
from +7A40+
9,6001 price,
13.72 -500Supplier from
474
units Supplier compute
Feasible
A
from to13.70(9,600)
total B: minimum
Supplier 474
cost
units points
forg=474
A.
with =
$133,141.86
TC= cach
from price
$133,141.86
Supplier range
unll
B.
you
find

F-46

TC
= Ifthe SchedulPríce$80/order
: S= 600Given:
D=3,800=
This
quantity |2DS
Compute StDeterminethe cost quantity
Conclusion:The
optimal
ep1:
for
quantity Even
though
TCgo1 the
firm
Jf
firm H=$10/ b
801+200-800 1-199Range
ox/ y e ar boxes
discounts,
changes decides boxes
H the =801
the 10+ decides
00

feasible
is common
is frominventory
order to 10+ to (recommended) per
2(3,600)80 lower. there order order Price year
in
10 minimum quantity 800
are
to total
801(3,600
801
800 (3.600 800 $1.00 $1.10 $1.20 per
the multiple
801,
range boxes
240 =
of cost )80+ boxes, 1.10(3,600)
=$8,320
80+ boxes, Unit
point. 801 we
curve (P)
is shift 1.00(3,600)
200-800. U the the
shaped total total
prefered to is
a fairly cost cost
different total
to flat = is is
the inventoryaround$7,964.55 computed computed
order total
cost cost its as
quantity minimum,
as
followS:
curve.curves. follows:
of
800 Therefore, when
because
there
the when are
total the
 Conclusion: TC.= costs.
Determine Step2:
801\
Optimal total
10+
cost
order 3,801600 for
3,264000) the
quantity
80 common
13-34 = 80+1.10(3,600)
1.00(3,600)
240
+
minimum
boxes.

= point
=
$7,964.55 $6.360 and
for
the
price
breaks
of
al
lower
VN

20 19 18

C. b. Stockout . Given:
a. OaLT=EDDLT
l52
b=600 lb.
Stockout
smaller
ROP.
C. b.
SS ROP TheUsingDetermine
uniEDDLT
=30Tuts Given: (800demand
for
DaiusageGilyven:
Service e=800
ROP= Stockout St.o10ckout
With ROP TheDetermine
SSAppendix
Using B, feetday
=69.9
no = =closest risk closest
=Appendix 300
= Expected risk 1,500 trisklevel
zOaLt=1,75(52) EDDLT
safetyEDDLT = risk =70 ROP units x
6 should feet; desiforr ed:
probability SS 4% probability days) .0various
5 feet/day&
for of units |= time
lead
stock, + + B, for
SS=600+91 4%
2% zTALT Table 1% + 1.00 for 95%.
Table risk is(roundup) I,800during 1,800 levels
stockout > /s risk .95 -
is 1%. =300 9901, B,
=91 9599, B, of we of feet lead =.05. feet;.02safety of
stockout.
we Greater -6,600 time
risk = units which look + which look stockout: =6
2.33(30) This forstock:
is 691 stockout corresponds the
for +
. Srequires
feetSafety 2,100 days.
13-35 50% units corresponds for
the feet;
(z=0.00). risk =300 value z stock=
value z safety a and
= + to
to
corresponding smaller 69:9corresponding
z
EDDLT
z= =2.33. stock 2,400
feet.for
1.75. =369.9
z=less + of
SS1,800
to =
to safety =l.00-.01 feet.
370
1.00-.04 stock& (round
=0.99.
=0.96. up)
 21.

b. a, Hint:Service
level=
90%LT=2 d=21 Given:
gallons/week
z= 8=6+
z=2/1.871
Risk From 2=1.871z solveUsi
for 2:g Risk
nDetermine (roundup) Ol= Days ROP Determine
TheUsing Workgallons/week
3.5
8=21()+z(35)/2/7)
1.07
1.871z ROP
Q=do1+LT)+z0, days
of
Appendix =Formula
of
a
10
days Supply of dLT) =closest
Appendix in &
stockout (round dLT) stockout the
probability ROP terms the
&
probability
+ 13-13, =9/(21/7)
8 of dairy
before B,two to z(o, at gallons z(o,)WLT + TableB,and weekS
Table the days is
set end is open
thdecimals)
is B, )WLT the are .8997, B,of
order the ROP theof
experiencing
of VOI =9/3=3
on = which looksuppl
wey days
7

arives=
lead +hand
LT 21(21) a
time
equal initial
-A= at days for hand:on week
tolead the
+1.28(3.5)/(27) corresponds the
service
-.8577 1 the stockout a 21order of value
z
quantity time: time:
supply
level 7 to
córresponding
=.1423 before on z=
is on hand 1.28.
.8577.
= 128(35)N12/7-8=3
hand this
at 8.39
=
14.23%. when order the to
ROP gallons
=9 90.
the arrives:
order
is (round
placcd
ad
c.

d(LT)+z(a,)WLTROP =placedFormulUsinganotermine
Risk eDet
r ROPermi
Afgallons.=9ne ago). ifrnomitiheal the The
21()+(3.5)/2/777=
om7=6+1.871z
Risk z=1/1.871
Frz=0.|5=31.87iz. of one suppliemar, nager
Appendix
of and a
day,
stockout (round stockout the
solve probabilitythe quantity the is
13-13, probability order
manager using
B, to for at the
beforeTable two z: the date.
set end on receives
Two ROP
thisdecimals)
B, the of hand of
a
experiencingof
=9-2=7 stockout:
order the ROP the have modeB
gallons
been
a
lead call
equalinitial described
that
arrives=1-7019=.2981 time tolead a the
service the stockout gallons order in
quantity
time: sold part
13-37 before sincethe wil a.
level
on beOne
is hand this delayeddayafter
.7019. orderwas
=29.81%. 1 order
day and
placing
arrives
after placed wil
the (in arrive an
order 2 (oneday order
days): 3
days with
was
 22.

SS= TheUsingZ0dLT SS
=riDetermine
Stockout
=3%.
sk Sthe. Step 2:OaLT134 Pl=ugz0dLT SS=The Using WeSolve Step l: gallons'
GALy 1.34(TaLr)50 SS Given:
ROP dayd=
30
know =
inclosest
1.88(37.313)closest
Appendix =37.313gallons 50values Appendix
for
the gallons
50 =
170
that gallons
probability aprobability
nd SSstandard
B, B, = and
solve Table 50.
=Table deviation provides
70.15 is (round for .9099, is
9699, B, oaLf: B,
= we to we a
three which look of stockout
71which look demand
(round for decimals) for
corresponds the corresponds the risk
up) during of
z value
z
value 9%
to the
to:z=1.88.
corresponding coresponding
z= lead
1.34. time

to
to 1.00-
1.00-.03
-09
-\.
=
91.
23.
24
=625ROP d=85dGiayven:
boards/
boards
duT=1.1days daysLT
=6
a. =l Tyunits/day
=2
Gad=
days units/day
dGLaLT=4 12Given:
Service.level96% = e z=1.
ThIJsing 2z=115 3.5 I15 625 6Det25 =ROPermi=ne
3 /9=93.5z
D.
TheUsiDetermine
risk =510 (85 dz
the ofThe ROP ROP ROP ROP ng Appendix (round x LT
of + 6) the
year, the closest a 93.5z
year,model 70.14 48 = dx= Appendix
= = stockout to probability
+z +
the (12x4)+ probability
the
Table
B,two (85)zdot
ROP thmie ght =71
22.14
LT ROP:
deci=mals) (1.1)
ROP
would not units
+zJYod+ Table
B,
-.3907 1 we
B, of
a
would be 1.75/4x22) is stockout:
be ate (round
appropri 9599, B, =.1093finda
set be + we
to set up) ot which look probability=
high to if (122 + corresponds fothre
10.93%.
low ity
seasonal of
(causi(causi
ng ng vaBue z
13-39 1') x 8907.
excess
stockouts) were corresponditoz=ng
inventory). present 1.75.
and
because to
during 96.
dunng
the
slow the
times busy
tof
imes
 25

b. a. gallons/day
Price : =2 G360D=4,500
Listdays/year $30S=Given:
H=$3gallonsLT=4x
z=2.17.Using 400-799Quantity
1-399
ROP=45.02
+2.17(2)N3
=12.5(3)ROP ROP ROP Acceptable
d Conclusion:
=3+ TCaoo I400= TC300 = =Costs.
TC
total Step2: This
Determine Cormpute StDetermine
ep1: 800+
= Appendix 360 4,500 quantity (1
12.5(3) d(LT) = 800 (4001
2(4,500)30
2DS_ the -0.25)
12.5/day =stockout Optimal the
=
46 + +
23+ng30 is common optimal Price
Unit
z(o, B, cost feasible S1.62 S1.70 S2.00 4x
gallons2.17(2)N3 Table risk order 800(4,500\ (4,500 3004,500
for 0.75
)WLT B, = the in
3
minimum order
(round 1.5%.quantity common the a3
we )30 )30 + quantity:
look range gallons300 = days
up). Determine + point.
13-40 for =+1.70(4,500)
1.62(4,500) 2.00(4,500)
$9,900 = 1-399.
400 minimum
the
ROP: gallons.
value z
= = point
corresponding $8,658.75$8,587.50 and
for
the
price
to
l-.0D=20 berokasfo

al
lower
ud

26

C. b. $.20/box/
a.
yearH= $2 =.5 d=5CGiven:
boxes/week
S'LT=2
=weeks
boxes/week
x5=260D=
52
Assuming
z=2/.707=2.83
Risk From 2=.707
+.707z Plugging
=10 12
2z 12 ROP Use center
OI=7 z=2/.707
Risk From2=.707z Plugging
12
d(LT)+z(o,)WLT
12 ROP = = ROP If
= Formula 10 =
of
Appendix 5(2) = orders
weeks. Appendix
of 5(2) 2DHS
stockout +d(LT)+
in stockout t.707z
+ in 12, = a
=2.83 values 52-week
z(.5)W2values 13-13 Determine when z(.5) determine
= B,
B,
V2 2(260)(2)
(round
Table and z(o and amount 1=(round
Table and .20 year,
-.9977 1 solving )NLT solve
-.9977 solving risk
B, to the B, to determine
on =the two of
=72.11=72
= the two for hand risk .0023 lead for a
.0023 lead
decimals)
for z: of decimals) z: stockout:
z: = the
12: =.23%.
running time.
13-41
=.23%. time EO0:
service
service out units
before level
level
this is
is .9977.
.9977. order
arrives

(Q=36)

if
the
copy
 28 27

b. a.H=$.40 S=$1 LT=3

Supemarket rolls/day
days G=2rolls/dayd=
Given:
10 ROP RÒP ROP The UsiService
ng Determine LTy LT=8dayslb.ldayG=
10Given:
ROP=30+6.06 ROP ROP TheUsingDetermine D=10x
=3,600360Determine ROP Oda=I d
=
75(2)W3 =closest
+1.=10(3) Appendix
== =
640640+ (80 = closest
dx
Appendix
Level lb.Jday
80
d(LT) H 2D
+ x8) probability the
probability the
ROP
the open
is
108.61=748.61
1.28/(8x IT+ B, = 1 ROP
+zlo,WLT B00: +
=36.06=37
B,
Table 2(3,600)(1)
that
360 1.28/(8xzTo; is
-.10=.90.
Table that
.40 day
is
9599, B, wil 10²) .8997, B, would
weprovide year
a
+10²)
+ we
which lo00k provide
(round which look 134.16=134 = =749 (80²
+
o
for
(round 12) (80²
13-42 a
up) corresponds tfhoer service x corresponds the stockout
a
x value
z
value z level up) 12)
to risk
corresponding to of96%: corresponding z= of
z
= 10%:
1.75. 1.28.

to
to 9n
.96.

30 29.

Determine Units Day | Usage Lead ROPGiven: , Servliec=99%veleH=$3 S= 1,2cases

Gi00D=
ven:
Z=4.2/2.191
On
2.191z4.2 = 18
= 18
Plug Step2: 6Calculate Step1:
d(LT)+z(o,)WLT
4.d= ROP = $40
=4.6(3) = SS TheUsing TaEDDLT -Determine
T =6 80of80 Qo
=
Determine
Appendix 13.8 values over time 18 = per per
(3-4.6)2+(4-4.6)2+(7-+.6)+-(5-46)-1265 the zTaLT closest
Appendix cases
+
2.191z into the 3 the for units case order
+z(1.265)
= mean service resupply=3
last probability
= and the the
B,1.92 Formmula per
and 10 233(6)
B, alevel 2(1,200)(40) optimal year
Tabl(round
e 10-1 level days: standard
standard Table of 3

B, W313-13 days = is satety order

the to achieved 13.98 9901, B, deviation =
lead two and deviation we stock 178.89 quantity:
decimals) solve by = which lok
time the 14 oflead
if
1343 service for of curent coresponds fthore
(round cases: 6time 179
=
z. daily
level demand.
up) value z demand (round
(round ROP.
is 6
to
corresponding to
Hint: z= is an
.9726 to 2.33. normally iateger
three Use
=97.26%. Formula
4 7
decimals) to distributed value)
3 8
0.99.
l3-13.
with
4
a
mean
10
 31

Q= CycleQ=656.6
3: Cycle 2:
Q=622.6 Cycle 1: TheUsing units/day Ol= 14 Given:
G=3 LT=2days days
Service A
+2.05(3)WI4+2-103
Q=40(14+2) Q=d(01+LT)
Q=40(14+2)+ Q=40(14+2)
561.6=562 2.05(3)14+2-8 closest
3 2 On-hand units/day
CyeleOnHand d=40 drugstore
Appendix Level
=657 =623 probability inventory uses=
03 42
(round
units units +2.units05(3) + B, 98% the
zo, Table in
(round (round
Vor+LT .9798, we B,
is each fixed-order-interval
up) up) V14+2
up)
cycle:
which look
-42 -A tor
13-44 corresponds the (FOI)
z
value
model
to
corresponding
z
=2.05.

to
9g

J2.
a.
Given:
60 Company
operates
b. Can H= We
C. z= P34:
1.96.Using Determine be Uniunits/week
=$15 G4d=
costt units/week have
Compute
z=1.96.Using D=60Compute P35:
ROP=120+11,09 ROP ROP (30)($15)
orderedRis2.k=5% $70S= LT=2 weeks
Q=334.01
Q=d(o1+
1,96(5)/4+2-110
Q=70(4+2)+ Order Appendix P34 the
= following
Appendix l2DS
H
x
50 the 60(2) = d(LI) when any =
the every
=3,000 EOQ $4.50 weekS 50
335
=
LT) order +1.96(4)/2 + B, to time
information
B,
2(3,4.50000)(70) units/year for weeks.=131.09
4 z(o,)WLT TableB, reorder
units
zo,Vol+ + Tablequantity P34:
each
H-(30)($20)
weeks=4
O[
=6.00
Gr5 d=70
units/week.
Unit
cost
$20weeks=2
LT
yearper
(round B, we 2.5Ri%sk $30S=
units/week P35 items: on
we for =132 look item: the
up) LT look P35 =305.51=
units306 two
-A if units for
for 1 0 the
1345 the units (round
value z
value z are up)
on corresponding
corresponding hand
at
the to
to time 1
1 the -.025=975:
.025 - order
=975:
is
placed:
 33

a. Given:
We
and
Determine Classify
Step 1:
the
have
sum the
V1-001TS-041TS400TS-300P9-103P7-100P6401P6-400HS-201 the VI-001TS-041TS-400
TS-300P9-103P7-100P6401P6-400HS-201H4-010
H4-010
Itern ofthe items
Item following
Annual
the
individual as
Dollar A, Demand
Annusl list
4.0020.00 40.00 45.00 22.00 9.00 12.00 28.50 4.00 2.50Prie B,33,100 45,00021,000
Unit Estimated ofitems:
or 800 7,5006,25014,5009,80060,200 20,000
AnnualValue C:
13-46
Estimated
Annual
Dollar(Unit
33,100 45,000
800 21,000 7,5006,25014,5009,80060,200
Demand
20,000 Pnce
Values: 25 40 40 40 50 80 60 50
Ordering
Cost
x
Estimated
Cost(%)
35 25 24 25 40 30 30 30 20Holding
3,858,750 1,800,000 20
132,40016,000 945,000
165,00056,250 279,300
174,000 240,800 Annual
Dollar Annual
50,000 Value
Demand) 4.0020.00 40.00 45.0022.00 9.0012.0028.50 4.00 2.50Price Unit

for
each
i.

h.
V1-001
H4-010P7-100
Determine Note: TS-041 P9-103P6401H5-201P6-400 TS-300TS-400 Item dcitems.
Value Arrange Step 2:
An for
H4-010 Item alternate each the
VI-001 TS-300P9-103
TS-400
TS-041 P6-401P6-400H5-201
P7-100 the 3,858,75016,00050,00056,250 174,000
165,000
132,400 945,1,800,000
279,300
240,800 Annual
000 ValueDollar Then, items
EOQ category
solution determine in
Estimated
Annual for descending
each Category (round
Demand could
33,100 45,00021,000 7,500 6,25014,500 9,80060,20020,000 item
B A
the
800 to
(round be two ordet
percentage
to decimals). basedon
13-47 include Percentageof
to
Ordering nearest 100.00% of
Cost 60% 20% 20% Items itemsAnnual
25 40 40 40 50 50 S0 80 60 50 P6-400
integer): and
|Holding
Cost($) through theDollar
Unit percentage
10.00 Values.
1,1.0874d 5.00 11.25 8.80 2.70 3.60 8.53,5 005.8d 2,000.50 V1-001l Annual
Dollar of
Percentage
EOQ 100.00% 15.38% 13.48% 71.14% Value
113 60 386 292 481 635 428 in Determine
of
the Annual
B
category. the
Dollar
A,
B,
 34

to
Because SL
attain C,= G= are Given:
estimated
sold Demand
a Cost-SalvageRev-
service .67 C at for
falls +.16080+G Cost half to
between
level jelly
be
= price.$3.30
1.60 $4.=80
of doughnuts
least
atthe Demand
29 28 27 26 25 24 23 22 (dozens)
$3.20- - per
cumulative 21 20 19 $3.20
67
dozen,
.67. is
$2.40=$.80 $1.60 = Demand doughnutsshown
(dozens)
The 29 28 27 26 25 24 23 22
21 20 19
13-48 Frequency
frequencies
resulting 02.04 .10 .11
Relátive in
10.14 13 .18 .12 01 the
are table
service Frequency
Relative sold
of.63 Cumulative
.02 04.10 11 10.14 .13 .18 .12 .05 .01 below.
Frequency for
level 1.00 98 94 84 7 63 49.36
and.73, 18.06 .01 $4.80Labor,
wil per
beDon r
materials,
dozen,
.should
73
=73.00%. and and
stock letover
overhead
25 doughmuts
dozen are

F-47
b.
C,C, SL SL
Puseprcihea.Giseven:
= a.
$10.47.
equal to 10.045
Conclusion:
10.47
L10.0=45 ==G+245
.959C,
C,-.041C;
= =,041C. =.041(C,
part strategy:
Service Determine Determine
and
Because
spare
of
C.G-SL
=S$100 dis
=C+C, 88,000 Determine
trib p
utiourc
n ha
C Level solve
bs=,041 parts .997 pricefor
the the + with
(round + the Stockout
Poissonacostspare
:
Carrying 10.045 245) + =041
for 0 forvalue range
order
falls
to 1.45(3100)
C,: between 88,000 optorder:
imal mean
to Spare of of 88,000 e
two
O C,shortage =9. [From |number parts.3.2 of part
=
decisparemals) Parts for The the 10 9 8 7 6 5 4 2 X
Poisson 245
+ $245 $88,000.t= aX135

parts which
.041 costresulting
cumulative =997
spare
of
S100
=
is the for Table
13-49 the Demand each.
service which service Probability
Cumulative parts
best probabilities 1.000 998 994 983 .955 .895 781 .603 380 171 .041 with to Carrying
for
strategy level= carying level u
= parts
wil of 3.2]
if the 0 wil and
the service spare be
.994 disposal
approximate
shortage .998 and
parts =
level .998, costs
cost would 99.8%.
of the =
is stocking 145%
less be optimal
the of
than 0 best the
or spare number
 37 36

b. quarts/day
a. G=6 day.per Given: z=-0.11.Using
S, C,=Cost pounds/day
SL C,= o= 10 d anpound.
dPurchaseGiven:
dstandard Daialy
= = a
strawberry
season.
during This .0668C,
C;C=9332C,=C,+.- 327 35) +
= 327C,=9332(C, SL
=Plug
Step2:93.32%.Using Z=value. z
Determine
C,÷S.35
Step 1: C,Determine
= S, 49
= 40 =u+ zo =r+G Rev 80
demand Appendix standard
- pounds/day
might$4.90per 9332C, C,+Ce in So quarts/day Daily price
.9332C Appendix -d Rev-Cost deviation
-
Salvage= Cost
be
and
the can 80
=
B,
150 = deviationdemand$4.20 =
reasonable a quart = implied
327 C,+.35 B, 649- of
be + Table $S.
1.50 70$4.20
solve
Table unknown = approximated6(-0.11)(10)
bya vahr + $4.20 canbe
(round 40 quarts B, 1.80 of per
for = shortage pound.
10
=.9332 B, 1.50 we -
find =4545 approxi
pounds.mated
figure to C,. $2.40
two we per =
find cost day. :78.9pounds = S1.=50 Selling
becausedecimals) that
that per S1.80
13-50 Excess
normal .4545 per
quart: price
d
by
it z
= perpound
a =
probably t 1.50 cost:
distribution (assuming
falls
pound nomal
pound.
$5.70per
corresponds = closest
$.35 distribution
is
close per with to
that As£9.
quart. a
to to fractional =$244
Salvage
price
the mean wih
a The
service a
lost grocer 40 of
values
mean

profit level quarts

orders are pot
ot
3
per 9332= = 4èpezyr
pstk
quat
38
39

Four Given: cakes

day Purchase
dcondiments Because
falls.4 C=Cost-Salvage
SL dav-old aecahke.Given:
prepareDemand
oz=0.43.Using = C=
SL
C;=S.10burger
Determine G4=50 pound.
pounds/day = and
= Rev-Cost
= Cost- 400 hamburgers to cakes can
+APpendix C, pounds/day standard a price prepare C be
zo + C the cost are
= C,.40 Salvage
optimal =S1.00 between 3.00 S12-
approxiFreshmatmeeadn
= sold
400+ B, x $.50 can 5. 3.00
=39-(1/2Y(S9.00) and
4 deviation be The +4.50
Table .40 - $9 cakes
+.20 burgers/pound
$1.00 daily per
prepared per resulting the =$3.00 the
rest sell with I
0
0.43(50) burger. 4 3 [From =4
B,=.6667
- order of pound. cumulative thrown for a
we S.80 50 Poisson per distribution
Poisson
find Demand fSalvage
pounds rom service $12
= = quantity:
= =cake outeach.
421.5pounds that $.20/pound
$.40/pound each probabilities Table S4.50/cake
per is value level
.6667 normallypound with Day-old
13-51 day. wil Cumulative
Probability
=
falls Hint: ofS.80 beof .003 u
(assuming .606 446 285 .1S1 .062 .017 = cakes with
closest distributed beef. per 446 285 6]
Shortage
cost
musts =and sell
a
Labor,pound. 44.6%.
to for
that .6664: with .446, r of
overhead,
Burgers $9 6
fractional a the each. per
mean optimal day.
sell One
values bemeat,
of for It
in400 number half costs
dollars buns, S.60 of
are pounds the $9
each. to
possible) per and of
per
 40.

y. Given:
onlDemand
Conclusion: 10-8.5
=85C, SL
= Set C=Determine
C,=$10 =4
So
C,=$.53=95Ce 0.5 =95(10+
=.95C.
10-9.5 Ce) 10 SL
10 8.5+.85Ce
Cq
= Set Step2; =85Ce 10
=Ce)10
1.5=,85(10+ Step 1: Forunknown Profit
=9.5 SL $1,76 = SL 4 for
C, =95C G, =.85 machines on
+ +Ce + rug
Ce and the rug
Implied(round .95Ce and (round
implied cleaning
cleaners
to
to 10solve
10 to
10 solve
be
range two -+c two + 10 Demand
for C for optimal, range
machines
decimals) =85 3 2 1 Sl10/day.
=95 Ce: decimals) C:
of the of Demand
excess excess 3 2 1 is
SL
ratio Frequency Clydeshown
13-52 cost: cost 1.00 05 10 15 20 20 30
S.53 must per Frequency has in
1.00 05 .10 15 20 20 30 4 the
< be machine: Cumulative rug-clcaning table
Ce >.85 Frequency
SS1.76. 1.00 .95 .85 .70 .50 .30
and below
<.95. machine
Machines

are
rented

Supp0seC.
now
unknownC,= S,=4cost? protests
Clyde f
C10) +SL Set Step l: Co C=S10 theIfdecrease
Conclusion: C,-.95C,
$190.00
C
.05C, C,=95(C,
=5 +9.5 10) +
9.5=9.
C,=95C,
= SL
=
.15C,88.C,
Set Step2: CG-.
C=
$56.67
5 ==8.85 5(C,
5C,
=.85C, = =+ SL
=.85 machines
A
decreaseSLded.inWcrheanseexcesss,
Assuming
in
C.95
+
that the
C and that cost
Implied (round
and (round 8.5 to the t nuraber that
exeess
solve C, solve
+ C
be optimalexcessissupposed the
10 for optimal,
C to of
range to for two cost answer
two C:
=.85
C,: number cost machines
decimals) per to
decimals)
of the be
day from
s
shortage SL of higher, he
ratio machines $10 stocks? part
must then a
13-53 cost: anid is
4,
isthe the too
be
$56.67 >.85 shortage number
along low,
what
s and impliedthe is withteh of does
C, cost
sS190.00. < machines this
95.
peroptimurm suggest
day
range ofis should
unknown. stocking an
beincrease
shortage
level.
or
a
 41.
Stocking
Level
b. a. Number
equipment
Probability
Probability isGiven:
Spares
usage:of install
and
We Use not
Use spares.
Because SL= C=Cost
C,=Cost
should.10(1)\(S150)=S15 Demand=0
.10(2\S150-S30
50(2)\($150)=$150.25(1)($150)=$37.50
103YS150)-$45 =0.10
Prob, available, cost
the the
is
ratio S500 $200
S0
order
tabularmethod .870 C,
+C, C, excess ofof
stockout 2
3 between
is method dsay. davseach.
spares. Spares#of
.25(2)($1000)=$50015(3)X$1000)=$450
50(1X$1000)-$500 =0.50
.S0(1)($150)=$75 1,000 1,000inventory = 3 to Unused
wil
Prob, 50
=1 to
Demanddetermine (S500 detenine
150 +
the be
curmulative =per .25
neededspares
=.870
Unit Probability of the
the
day) Demand have
to
13-54
numberprobabilities Cost (2 15 25 S0 10 number 15 3 obtain a
.25(1)\|
15(2)\$1000)-S300
$1000)-$250 days) salvage
Demand =2
=0.25
Prob. Salvage - of
a
$0 of =
spares replacementvalue
spares $1000 Cumulative
Probability
of Value
.85 1.00 85 60 10 to of
to = order-: $S0
order: and $200-$50 each.
.15(1X($1000)=$150 Demand=3
=0.15
Prob. 1.00,
If
it. a
S0 we The part
need =
S150 cost fails
to for
Expected order idle
$232,50 S255 S56 S1,450 Cost 1

Stocking
3
Level
0
b Probability
Nu
Prm
ob e
barbMonda
d
ielim
ly c,alandCalyGikesven:
taynpidy:of
t. Ustehe Because
($27)Expectedpayofsupermarket SL= C.=Unit C.= profit: Use cost
(.15 (.15 [Sell Number ExpectedExpected the
$3
(.15 (.15 (Sell (.15 (.15 [Sell *0*$27)
(,15 (.15 (Sell Demand
.15 ==0
Prob, Selling ratio
Oimaximizethe
Clusion:The
wil
-$10.35 *3* *0* -$6.90 0; *2
* Over
0, *1*
*0* -$3.45
Over
0, $0 *0*0 0,
* Over Number
of
Cost
*
Profit
ratio
Payoff method
the +C,
C,
C,Cost-
Price method
each.
Over $23) $23) $27) Cakes shoulservice
d Cakes#of one-third and
$23) $27) $23) $27) 0] - of = they
3) 2] = 1] = - 27+ 23 Salvage - determineto
- - = - Probability
Left Probability
CakesExpected
-
to stock level
27 Unit 3 2 35
sell
supermarket
expected (,35 (.35(Sell (,35 (.3(.5 3[Sel5*0$23)
l (.35 [Sell
=*11, S0 * *00, l Prob.=35 Over.
(35 (.35 [SelDemand=1
Sold
determine 2 of =54 Value Cost 30 2
of
those for
*11, Profit-
ofof cases .54 =$60-$33= Probability of
numberthe
$6)
-$6.65 *2 *1 1, $1.40 *1* $9.45 0*$23) Over
* at falls Demand are
each.
payott. Over* Over
* $27)
Over
* $27) DemandRegulDemand
ar the of $33- .20 30 35 15
20 3
sold.
should S23) $27) $23) $27) 1] 0] = - 0] Expected number weddibetween
ng
2] {(i/3)( AnyUnsold
=- = - * * cakesto
of
stock (.30 (30 (Sel-l *0S27)
(30 (30 (Sel-l nd=2 ExpectedPriExpect
ce. ed the
S27 that cakes
13-55 (.30 (30 (Sell (30 (.30 [Sell *1*S27) =30 Dema
Prob. Cost cakesof cakes. cumulative
1/2XS60)) Cumulative
Probability remain
1, S0*0
2 0, maximize
expectedto are
$9.30 * OverSI6.20 S23)*s27)" 2OverS8.10
cases * *0 2, 0 * Over Cost Profit 80 50 5 prepare
1 2 2, $23) Over
* S23) to .00
reduced
are
0) prepare =
of S23) S7) 0] = 0} = per per
$23 donated.
wedding = - l) = - Cake
Cake
probabiities to
to
l *2*S27) 0 [Sel-l *1*S$27)
(.20 (2=
620 (.20 ISel*0*$23)
20 [Sei-l 0] (20 *S27)(,20*0
(.20 (.1,Over (Sedl
Demand=3
Prob.=20 teft Sold maximize
half
cakes. $5.0S23)
2, 40
* *0 0.
Over
price
*0* *3$10.3,80 Over of.50
This SI6.20 Over Over S23) at on
$23) S27) 0] C,Regular expected
0] 0 = = = 2nd
number = - $23) .80,
Expected
Payoff Price
S19.50 * the
of $21.50
cakes S8.50