User Account

All Pages

Two Questions, Operation Management

Assignment Help:
2. You have been assigned to make a long-term sourcing decision for a raw material you will purchase. There is only one supplier of this raw material. You estimate that you need 60 units per day of this raw material, with a standard deviation of 20 units. The supplier charges $300 for each unit and $3,000 fixed cost for each delivery. Whenever you order from the supplier, it delivers in 60 days. You use a 20% interest rate for estimating holding costs. If you run out of raw materials, in which case your production line has to stop, this costs you $1,000 per day for each unit of raw material in shortage. Assume 365 working days per year.
a) What is the optimal (EOQ, ROP) policy you should use?
b) If you use the optimal policy, what is the annual fixed ordering cost, and what is the annual inventory holding cost?
3. The Silky Shirts Company based in Thailand makes silk women’s shirts for a retailer in the U.S. It costs Silky $30 to make each shirt, it sells them to the retailer for $50 and the shirts retail for $100. The retailer estimates he can sell an average of 800 shirts with a standard deviation of 400 at this price per season (normally distributed). The retailer sells all remaining shirts for $20 at the end of the season.
a) How many shirts should the retailer order to maximize his profits?
b) If Silky had its own stores, and could make and sell (at the same retail price as above) its own shirts in its own stores instead of needing the retailer as a middleman, how many shirts would it order assuming demand remained the same as above?






c) Assume that Silky offers the retailer a revenue sharing contract where the retailer shares half the revenue on all sold shirts with Silky, and in return Silky reduces its price from $50. To what level would Silky have to reduce its price to induce the retailer to order as many units as the integrated company would order in Part b) above? (The retailer still sells the shirts for $100 during the season and discounts them to $20 at the end of the season but now gives half of all the revenue obtained to Silky.)

Related Discussions:- Two Questions

What must a short-term or long-term consequence make, What should a short-t...

What should a short-term or long-term consequence make a difference in resolving an ethical dilemma?

Explain role in establishing a canadidate''s brand, How does the use of mus...

How does the use of music in political play a role in establishing a canadidate's brand?

Why communication is an important consideration in firms, Communication is ...

Communication is an important consideration in organizations, and a number of different constructs fit within the communication viewpoint. What types of leader communication attitu

Explain the stage in the product life cycle labeled a, The stage in the pro...

The stage in the product life cycle labeled A in the below figure is called introduction. maturity. growth. diversification. decline.

Linking strategic & operational change - operation strategy, Linking Strate...

Linking Strategic and Operational Change - Operation Strategy Quinn (1988) criticises those who see strategy formulation and implementation as the 'classic trap' where despite

Find what is the minimum unit price, An electronics firm is currently manuf...

An electronics firm is currently manufacturing an item that has a variable cost of $.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000 per month. Current d

What are the disadvantages of the level capacity strategy, What are the dis...

What are the disadvantages of the Level capacity strategy? The disadvantages of the Level capacity strategy are as follows: a. High risk of stock obsolescence when customer

Explain operational management strategy for a company, Identify how the cha...

Identify how the changes in the internal envirobnebt affect the Operational Management strategy for a company. For example, what impact are the following factors likely to have on

Compute the probability, The probability Mary will receive an A in a class ...

The probability Mary will receive an A in a class is 0.51. Assuming independence, if she is taking 5 classes this semester, calculate the probability she will receive exactly 3 A's

Define what mechanisms are related to the organizations swot, Define what m...

Define what mechanisms are related to the organization's SWOT in order to unfreeze, change, and refreeze (Lewin's theory of change) HR/business practices across the global organiza

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd