Problem 16-15The owner of a large machine shop has just finished its financial analysis from the prior fiscal year. Following is an excerpt from the final report:

Net revenue$338,000

Cost of goods sold299,000

Value of production materials on hand42,500

Value of work-in-process inventory71,000

Value of finished goods on hand29,500

a.Compute the inventory turnover ratio (ITR).(Round your answer to 1 decimal place.)

Inventory turnover ratio 2.1 times per year

b.Compute the weeks of supply (WS).(Do not round intermediate calculations. Round your answer to 1 decimal place.)

Weeks of supply

Problem 16-16The McDonalds fast-food restaurant on campus sells an average of 10,800 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 685 pounds of hamburger in stock. Assume that the hamburger patties cost $2 a pound.

a.What is the inventory turnover for the hamburger patties?(Round your answer to 2 decimal places.)

Inventory turnover per yea

b.On average, how many days of supply are on hand?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Average days of supply

Problem 16-12Your company assembles five different models of a motor scooter that is sold in specialty stores in the United States. The company uses the same engine for all five models. You have been given the assignment of choosing a supplier for these engines for the coming year. Due to the size of your warehouse and other administrative restrictions, you must order the engines in lot sizes of 1,200 each. Because of the unique characteristics of the engine, special tooling is needed during the manufacturing process forwhich you agree to reimburse the supplier. Your assistant has obtained quotes from two reliable engine suppliers and you need to decide which to use. The following data have been collected:

Requirements (annual forecast)14,400 units

Weight per engine25 pounds

Order processing cost$145 per order

Inventory carry cost20 percent of the average value of inventory per year

Note:Assume that half of lot size is in inventory on average (1,200/2 = 600 units).

Two qualified suppliers have submitted the following quotations:

ORDER QUANTITYSUPPLIER 1UNIT PRICESUPPLIER 2UNIT PRICE

1 to 1,499 units/order$565 $558

1,500 to 2,999 units/order551 558

3,000 + units/order550 548

Tooling costs$31,620 $29,300

Distance115 miles 100 miles

Your assistant has obtained the following freight rates from your carrier:

Truckload (45,000 lbs. each load):$0.80 per ton-mile

Less-than-truckload:$1.20 per ton-mile

Note:Per ton-mile = 2,000 lbs. per mile.

a-1.Calculate the total cost for each supplier.(Round your answers to the nearest whole number.)

Supplier 1Supplier 2

Total cost$8169690 $8066300

b-1.If you could move the lot size up to ship in truckload quantities, calculate the total cost for each supplier.(Do not round intermediate calculations.Round"Required lot size for truckload" andfinalanswers to the nearest whole number.)

Supplier 1 Supplier 2Supplier 2

Total cost7968090 8066300$

Problem 18-4Here are the data for the past 21 months for actual sales of a particular product:

LAST YEARTHIS YEAR

January320 270

February440 395

March445 375

April465 405

May415 430

June430 355

July405 385

August315 305

September345 390

October495

November550

December515

Develop a forecast for the fourth quarter using a three-quarter, weighted moving average. Weight the most recent quarter 0.50, the second most recent 0.25, and the third 0.25. Do the problem using quarters, as opposed to forecasting separate months.(Round your answer to 2 decimal places.)

Forecast for the fourth quarter

Problem 18-7The following table contains the demand from the last 10 months:

MONTHACTUAL DEMAND

1 28

2 30

3 29

4 40

5 43

6 42

7 43

8 45

9 44

10 47

a. Calculate the single exponential smoothing forecast for these data using anof 0.20 and an initial forecast (F1) of 28.(Round your answers to 2 decimal places.)

MonthExponentialSmoothing

1 28.00

2 28.00

3 28.40

4 28.52

5 30.82

6 33.25

7 35.00

8 36.60

9 38.28

10 39.43

b. Calculate the exponential smoothing with trend forecast for these data using anof 0.20, aof 0.30, an initial trend forecast (T1) of 1.00, and an initial exponentially smoothed forecast (F1) of 27.(Round your answers to 2 decimal places.)

MonthFITt

1 28.00

2 29.00

3 29.74

4 30.23

5 30.74

6 31.57

7 32.72

8 34.18

9 35.91

10 37.62

c-1.Calculate the mean absolute deviation (MAD) for the last nine months of forecasts.(Round your answers to 2 decimal places.)

MAD

Single exponential smoothing forecast

Exponential smoothing with trend forecast

Problem 18-10The number of cases of merlot wine sold by the Connor Owen winery in an eight-year period is as follows:

YEARCASES OFMERLOT WINE

2005285

2006371

2007413

2008471

2009372

2010515

2011425

2012391

Using an exponential smoothing model with an alpha value of 0.40, estimate the smoothed value calculated as of the end of 2012. Use the average demand for 2005 through 2007 as your initial forecast for 2008, and then smooth the forecast forward to 2012.(Round your intermediate calculations and final answer to the nearest whole number.)

Forecast for 2012

Problem 18-15Historical demand for a product is

DEMAND

January15

February14

March18

April15

May19

June18

a.Using a weighted moving average with weights of 0.40 (June), 0.20 (May), and 0.40 (April), find the July forecast.(Round your answer to 1 decimal place.)

July forecast

b.Using a simple three-month moving average, find the July forecast.(Round your answer to 1 decimal place.)

July forecast

c.Using single exponential smoothing with= 0.40 and a June forecast = 16, find the July forecast.(Round your answer to 1 decimal place.)

July forecast16.8

d.Using simple linear regression analysis, calculate the regression equation for the preceding demand data.(Do not round intermediate calculations. Round your intercept value to 1 decimal place and slope value to 2 decimal places.)

Y= + 7714 t

e.Using the regression equation ind, calculate the forecast for July.(Do not round intermediate calculations. Round your answer to 1 decimal place.)

19.20

Problem 18-22Your manager is trying to determine what forecasting method to use. Based upon the following historical data, calculate the following forecast and specify what procedure you would utilize.

MONTHACTUALDEMAND

163

263

367

468

575

672

771

873

973

1078

1185

1285

a. Calculate the simple three-month moving average forecast for periods 412.(Round your answers to 3 decimal places.)

MonthThree-Month Moving Average

464.333

566.000

670.000

771.667

872.667

972.000

1072.333

1174.667

1278.667

b. Calculate the weighted three-month moving average for periods 412 using weights of 0.60 (for the periodt1); 0.30 (for the periodt2), and 0.10 (for the periodt3).(Do not round intermediate calculations. Round your answers to 1 decimal place.)

MonthThree-MonthWeighted Moving Average

465.4

567.2

672.1

772.5

871.7

972.3

1072.8

1176

1281.7

c. Calculate the single exponential smoothing forecast for periods 212 using an initial forecast (F1) of 67 and anof 0.30.(Do not round intermediate calculations. Round your answers to 3 decimal places.)

MonthSingle Exponential Smoothing Forecast

265.800

364.960

465.572

566.300

668.910

769.837

870.186

971.030

1071.621

1173.535

1276.974

d. Calculate the exponential smoothing with trend component forecast for periods 212 using an initial trend forecast (T1) of 1.90, an initial exponential smoothing forecast (F1) of 66, anof 0.30, and aof 0.20.(Do not round intermediate calculations. Round your answers to 3 decimal places.)

MonthExponential Smoothing with Trend

266.40

365.84

466.72

567.71

670.94

772.37

872.99

974.02

1074.68

1176.84

1280.94

e-1.Calculate the mean absolute deviation (MAD) for the forecasts made by each technique in periods 412.(Do not round intermediate calculations. Round your answers to 3 decimal places.)

Mean AbsoluteDeviation

Three-month moving average 4.333

Three-month weighted moving average 3.500

Single exponential smoothing forecast 5.115

Exponential smoothing with trend 3.062

Problem 19-7Develop a production plan and calculate the annual cost for a firm whose demand forecast is fall, 9,700; winter, 8,000; spring, 7,000; summer, 11,700. Inventory at the beginning of fall is 485 units. At the beginning of fall you currently have 35 workers, but you plan to hire temporary workers at the beginning of summer and lay them off at the end of summer. In addition, you have negotiated with the union an option to use the regular workforce on overtime during winter or spring onlyif overtime is necessary to prevent stockouts at the end of those quarters. Overtime isnotavailable during the fall. Relevant costs are hiring, $80 for each temp; layoff, $160 for each worker laid off; inventory holding, $5 per unit-quarter; backorder, $10 per unit; straight time, $5 per hour; overtime, $8 per hour. Assume that the productivity is 0.5 unit per worker hour, with eight hours per day and 60 days per season.In each quarter, produce to the full output of your regular workforce, even if that results in excess production. In Winter and Spring, use overtime only if needed to meet the production required in that quarter. Do not use overtime to build excess inventory in prior seasons expressly for the purpose of reducing the number of temp workers in Summer.(Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round up"Number of temp workers, Workers hired and Workers laid off" to the next whole number and all other answers to the nearest whole number.)

Problem 19-12

PRODUCTAPRILMAYJUNEJULY

A8906908901,290

B6907909901,090

C790590790940

Because the products deteriorate rapidly, there is a high loss in quality and, consequently, a high carrying cost when a product is made and carried in inventory to meet future demand. Each hours production carried into future months costs $3 per production hour for A, $4 for Model B, and $5 for Model C.

Production can take place either during regular working hours or during overtime. Regular time is paid at $4 when working on A, $5 for B, and $6 for C. The overtime premium is 50 percent of the regular time cost per hour.

The number of production hours available for regular time and overtime is

APRILMAYJUNEJULY

Regular time1,5901,4501,8902,090

Overtime7907401,120980

Calculate the objective value using Excel Solver.(Do not round intermediate calculations.)

Objective value 67593

July forecast1645

Alan Industries is expanding its product line to include three new products: A, B, and C. These are to be produced on the same production equipment, and the objective is to meet the demands for the three products using overtime where necessary. The demand forecast for the next four months, in hours required to make each product is

Problem 19-15Helter Industries, a company that produces a line of women's bathing suits, hires temporaries to help produce its summer product demand. For the current four-month rolling schedule, there are three temps on staff and 12 full-time employees. The temps can be hired when needed and can be used as needed, whereas the full-time employees must be paid whether they are needed or not. Each full-time employee can produce 204 suits, while each part-time employee can produce 164 suits per month.

Demand for bathing suits for the next four months is as follows:

MAYJUNEJULYAUGUST

3,2952,8953,1953,095

Beginning inventory in May is 405 complete (a complete two-piece includes both top and bottom) bathing suits. Bathing suits cost $40 to produce and carrying cost is 24 percent per year.

Develop an aggregate plan that uses the 12 full-time employees each month and a minimum number of temporary employees. Assume that all employees will produce at their full potential each month. Calculate the inventory carrying cost associated with your plan using planned end of month levels.(Round "Inventory cost" to 2 decimal places.)

MayJuneJulyAugust

Forecast3,2952,8953,1953,095

Beginning inventory405 4

Production required 3091

Regular workforce 1212 12

Regular production 2448 2448

Temp workforce3 4 4

Temp production492 656 656

Total production 29403104 3104

Ending inventory 413

Inventory cost$ $ $38.4$124.8

$1555.2

Problem 20-6Solve the newsvendor problem.

Probability0.16 0.09 0.16 0.22 0.26 0.11

Value1 2 3 4 5 6

Purchase costc=16

Selling pricep=50

Salvage valuev=11

What is the optimal order quantity?

Optimal order quantity

Problem 20-10You are a newsvendor sellingSan Pedro Timesevery morning. Before you get to work, you go to the printer and buy the days paper for $0.25 a copy. You sell a copy ofSan Pedro Timesfor $1.30. Daily demand is distributed normally with mean = 260 and standard deviation = 46. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.

a.How many copies ofSan Pedro Timesshould you buy each morning?(Use Excel's NORMSINV() function to find the correct critical value for the given-level. Round yourz-value to 2 decimal places and final answer to the nearest whole number.)

Optimal order quantity

b.Based ona, what is the probability that you will run out of stock?(Round your answer to the nearest whole number.)

Probability %

Problem 20-13Dunstreet's Department Store would like to develop an inventory ordering policy of a 99 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets.

Demand for white percale sheets is 4,500 per year. The store is open 365 days per year. Every three weeks (21 days) inventory is counted and a new order is placed. It takes 6 days for the sheets to be delivered. Standard deviation of demand for the sheets is four per day. There are currently 200 sheets on hand.

How many sheets should you order?(Use Excel's NORMSINV() function to find the correct critical value for the given-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)

Number of sheets

Problem 20-21Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $4 per unit of average inventory. Every time an order is placed for more item X, it costs $22.

a.Whenever item X is ordered, what should the order size be?(Round your answer to the nearest whole number.)

Order size

b.What is the annual cost for ordering item X?(Round your answer to 2 decimal places.)

Ordering cost$.00

c.What is the annual cost for storing item X?(Round your places.)

Holding cost$.00

Problem 20-29A distributor of large appliances needs to determine the order quantities and reorder points for the various products it carries. The following data refer to a specific refrigerator in its product line:

Cost to place an order$145

Holding cost35percent of product cost per year

Cost of refrigerator$480each

Annual demand520refrigerators

Standard deviation during lead time36refrigerators

Lead time6days

Consider an even daily demand and a 365-day year.

a.What is the economic order quantity?(Round your answer to the nearest whole number.)

Economic order quantity refrigerators

If the distributor wants a 90 percent service probability, what reorder point,R, should be used?(Use Excel's NORMSINV() function to find the correct critical value for the given-level.Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)Reorder point refrigerators

DAT, Inc., produces digital audiotapes to be used in the consumer audio division. DAT lacks sufficient personnel in its inventory supply section to closely control each item stocked, so it has asked you to determine an ABC classification. Here is a sample from the inventory records:

ITEMAVERAGEMONTHLY DEMANDPRICE PER UNIT

1500 $ 7.00

22,700 9.00

3200 9.00

44,500 29.00

51,100 5.00

6300 7.00

71,800 18.00

81,300 4.00

92,300 15.00

101,900 16.00

Develop an ABC classification for these 10 items.

ItemMonthly Usage ($)Class

13500B

224300B

31800C

4130500A

55500B

62100C

732400A

85200B

934500A

1030400A