Foods galore is major distributor to restaurants

Assignment Help Operation Management

Reference no: EM132233169

Foods Galore is a major distributor to restaurants and other institutional food users.

Foods Galore buys cereal from a manufacturer for $25 per case. Annual demand for cereal is 235,000 cases, and the company believes that the demand is constant at 940 cases per day for each of the 250 days per year that it is open for business. Average lead time from the supplier for replenishment orders is eight days, and the company believes that it is also constant. The purchasing agent at Foods Galore believes that annual inventory carrying cost is 20 percent and that it costs $40 to prepare, send, and receive an order. Use Table 7-2.

a-1. How many cases of cereal should Foods Galore order each time it places an order? (Round your answer to the nearest whole number.)

a-2. What will be the average inventory? (Round your answer to 1 decimal place.)

a-3. What will be the inventory turnover rate? (Round your answer to 1 decimal place.)

a-4.Calculate the total annual cost based on a product cost of $25/unit. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Foods Galore conducts an in-depth analysis of its inventory management practices and discovers several flaws in its previous approach. First, they find that by ordering 10,000 or more cases each time, they can obtain a price of $23 per case from the supplier.

b-1. Calculate the total annual cost based on a product cost of $23/unit.

b-2. What order quantity should Foods Galore place?

b-3. How much will they save annually by ordering the quantity shown in Part b-2. instead of Part a-1? (Round your answer to 2 decimal places.)

c. In its analysis, Foods Galore determined that demand and lead time are not constant. In fact, demand has a standard deviation of 71 cases per day and lead time has a standard deviation of 1.3 days. Foods Galore management wants to evaluate two service level policies. One policy would incur a 5 percent risk of stockout while waiting for replenishment, the other only a 1 percent risk of stockout. What would be the cost of carrying the safety stocks for each of the two policies? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Reference no: EM132233169

Questions Cloud

Calculate annual ordering costs for each alternative : Calculate annual inventory carrying costs for each alternative? Calculate annual ordering costs for each alternative?

Demonstrate a connection to your current work environment : Demonstrate a connection to your current work environment. If you are not employed, demonstrate a connection to your desired work environment.

Job description for employment assistant : how to recruit, whom to select, what training to schedule, and the like—can be improved if the decisions are based on the job requirements.

How a child of military man would influence education goals : Please cite two examples of how being a child of a military service member has would influenced your educational goals

Foods galore is major distributor to restaurants : How many cases of cereal should Foods Galore order each time it places an order? What will be the inventory turnover rate?

What are the ramifications of a private company : What are the ramifications of a private company failing to implement the guiding framework or update/maintain their system in accordance.

Why do incentive plans often fail to motivate employees : Why do incentive plans often fail to motivate employees? Does your job have an incentive program, does it work?

Judgment impact your decisions on what to post : Does the fact that your social media presence is easily searchable, able to be followed, and subject to judgment impact your decisions on what to post?

What are some of the security risks and issues : Describe what IoT is; what are some of the security risks and issues with IoT devices; what steps can be taken to mitigate these risks?

User Account

All Pages