PART II: Problem Solving

Answer the following questions in the space provided below each question.

21. C&A reports annual sales of $30 million, cost of goods sold of $15 million, inventory of $5 million, and net income of $2 million. What is C&A’s:

a) flow rate,

b) monthly inventory turns,

c) month-of-supply

22.Store B orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired.

a) What is Store B’s weekly inventory holding cost if lead time is two weeks?

b) What is Store B’s weekly inventory holding cost per unit?

23. Bakery A uses 80 bags of chocolate chips each year. The chocolate chips are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A chooses an order quantity of 10 bags, what are its ordering and holding costs per year expressed as a percentage of their annual purchasing cost?

24. Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 100. Store A purchases the product for $10 each unit and sells each for $30. Inventory is salvaged for $5.What is its expected profit if Store A’s order quantity is 400 units?

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