Reference no: EM132562520

Tariq orders frozen pizza crust from a local organic baker who charges him $1.25 for each pizza pie crust. The frozen crusts can last up to 8 weeks in freezer. The holding cost is 20%. Tariq pays his supply chain intern from UCP $7.50 per hour and this intern can place an order of any size to the baker in 15 minutes. The additional cost of placing an order (including materials and overhead) is $15.00 per order regardless of the size of the order. Records show, weekly pizza sales as follows and, of course, Tariq uses one pizza crust for each pizza he sells.

Week 1 ------ 475

Week 2 -------515

Week 3 -------525

Week 4 -------500

Week 5 -------485

Question 1: Assume that the average demand over the last five weeks will be the forecast going forward. How many pizza crusts should Tariq order from the baker? Round to the nearest integer value.

Question 2: Using the Q* from the first part, how many orders does Tariq expect to place over a year? Enter an integer value for your answer

Question 3: What is your order cycle time, i.e. number of days between orders? Assume 365 days in a year.

You are managing the inventory for the distribution center of a chain of grocery stores. You want to establish the inventory policy for Knorr Cup-a-Soup, a well-known brand of Pakistan. The demand for Knorr Soups is exceptionally stable with no discernible trend or seasonality. In fact, the demand on a monthly basis is essentially uniform and constant. You want to set the inventory for one of their flavors, Cream of Chicken.

You have the following information:

• Monthly demand = 2000 cans / month

• Cost of placing an order = ct = 575 dollars/order

• Holding cost = h = 15% dollars/dollars/year

• Product cost = c = 1.75 dollars/unit

• Selling price = p = 3.25 dollars/unit

• Must be ordered in increments of cases that hold 20 cans each.

Question 4: Calculate the Economic Order Quantity for Cream of Chicken Soup in terms of cases. Round your answer to the nearest integer value

Question 5: Your warehousing manager has informed you that the maximum space they can allocate to your Cream of Chicken soup at any one time is 200 cases or 4,000 cans. What is the percent increase in total annual relevant costs if you adhere to this maximum order capacity? Also show calculations by calculating the actual TRC. Enter your answer as a percentage.