What is the inventory level at the time the order is placed

Assignment Help Business Management

Reference no: EM133697051

Assignment:

Natalia owns and operates a small donut shop in Philadelphia, Canada. She is constantly baking donuts which are sold fresh out of the oven and customers line up to purchase them. She manages the inventory of the pastry flour used to make the donuts very carefully. The quantity of pastry flour she uses is exactly equal to 25 kilos per day (which makes exactly 250 donuts). The selling price of a donut is $3.50. The pastry flour is purchased from a supplier at a cost of $2.20 per kilo, plus a fixed delivery fee of $50 per order (no matter what the order size is). Orders for flour are always received exactly 2 days after they are placed. On a day when a flour delivery is scheduled to arrive, Natalia hires her friend Gilbert to help with the receiving and storing of the pastry flour. She always pays him $60 for the job, no matter what the quantity delivered is and how long it takes him to do the work.

The pastry flour is stored in a dry storage room which is kept at a constant temperature at all times of the day and night. The electricity cost associated with the storage room is estimated at $7 per week (this amount does not vary with the quantity of flour stored in the storage room). Natalia currently gets a 2.5% interest rate on her savings account annually. She plans to invest any cash the donut business generates into an exciting business opportunity (mass-market gluten-free donuts) promising an amazing return on investment of 5% per week. Assume 50 weeks per year and 7 days per week.

For the problem described in question 1, Natalia decides to place an order every five days, and she makes sure the orders are placed at the right time so the delivery arrives just as she runs out of flour.

1) How much does she order every time she places an order (in kilos of flour)?

For the problem described in question 1, Natalia orders 250 kilos every time she places an order and makes sure the orders are placed at the right time so the delivery arrives just as she runs out of flour.

2) What is the inventory level at the time the order is placed (in kilos of flour)?

Reference no: EM133697051

Questions Cloud

Discuss rollout of a change management initiative : Discuss Rollout of a change management initiative. Creation and implementation of a new compensation and benefits package.

Discuss three key risks or barriers associated with bitcoin : What do you consider to be the three key risks or barriers associated with Bitcoin? Explain those factors, too.

Using advocacy for the nursing shortage in texas : How do I discuss the stakeholders who would oppose my proposed idea of using advocacy for the nursing shortage in Texas?

Discuss quality management objectives in healthcare : Identify and discuss the quality management objectives in healthcare organization, including at least four definitions of introductory quality management terms.

What is the inventory level at the time the order is placed : How much does she order every time she places an order (in kilos of flour)? What is the inventory level at the time the order is placed (in kilos of flour)?

Discuss the methodology used within the article : Discuss the methodology used within the article and relate the approach of the authors to specific examples in the text.

History of smoking comes into the pulmonologists office : An adult male patient with a history of smoking comes into the pulmonologist's office for his yearly chest xray.

Writing entertainment in middle of a blank sheet in a circle : What are the first 3 to 4 things that pop into your head when thinking about entertainment? Write them down and connect them to the topic.

Australian and norway healthcare system essay : Concept Grid for the final should include all concepts used for the draft and final essay - The Search Strategy helps you plan and keep up with your searching

User Account

All Pages