Amount paid by the hotel for desert and frequency of production of desert under its current policy. Concept Introduction : Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Question

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Answer 1

Question

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

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Answer 2

Question

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

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Answer 3

Question

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

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Answer 4

Question

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

Answer 6

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

Answer 7

Chapter 10, Problem 29P

a

Summary Introduction

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Answer 8

a

Expert Solution

Explanation of Solution

Demand for desert = 30,000 per year

Production rate = 125 per day

Set up cost = $4

Cost of dessert = $0.40

Daily demand for dessert is calculated by dividing annual demand with the number of days the company can operate in the year.

Daily Demand = Annual demandNumber of operating days in the year

Daily Demand = 30,000 desserts365 days

Daily Demand = 82 desserts

Hence, the daily demand is 82 desserts.

Calculation of holding cost.

It is given that holding cost is 300% of the cost of the dessert.

Annual holding cost = 300%× cost of the dessert = 300100× $0.40 = 3 × $0.40 = $1.2 per dessert per year

Hence, the holding cost per dessert is $1.2

Calculation of total holding and ordering cost for given batch quantity.

It is given that the current batch quantity is 300 desserts.

Calculation of annual holding cost:

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 300 desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 150 desserts × $1.2×0.344 desserts

Annual holding cost = $61.92

Hence, the annual holding cost is $61.92

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts300 desserts× $4 = 100 desserts × $4 = $400

Hence, the annual ordering cost is $400.

Calculation of total cost of inventory:

It is calculated by adding the annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $61.92+$400 = $461.9

Hence, the total cost of inventory is $461.9

Calculation of frequency of dessert production:

It is calculated by dividing the annual demand with the batch quantity.

Number of batches produced annually = Annual demandBatch qunatity

Number of batches produced annually = 30,000 desserts300 quantity

Number of batches produced annually = 100 batches

Hence, the company will produce 100 batches.

Answer 9

a

Expert Solution

Answer 10

a

Expert Solution

Answer 11

Expert Solution

Answer 12

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

Answer 13

b

Summary Introduction

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Answer 14

b

Expert Solution

Explanation of Solution

Calculation of order size:

It is calculated by dividing two values and taking the square root of the attained value. First value is the multiple of annual demand and set up cost with 2. Second value is calculated by multiplying the holding cost with the value attained by subtracting the dividing value of daily demand with production rate from 1.

Economic Order Quantity = 2× Annual demand× Set up costHolding cost(1-Daily DemandProduction rate)

Economic Order Quantity = 2× 30,000 desserts× $4$1.2×(1-82 desserts125 desserts)

Economic Order Quantity = 240,000$1.2×0.344

Economic Order Quantity = 240,0000.4128

Economic Order Quantity = 762.5

Hence, the economic order quantity is 762.5

Calculation of total holding cost and ordering cost for optimal order quantity:

It is given that the optimal order quantity is 762.5 desserts.

Annual holding cost is calculated by multiplying the holding cost with two values. First value is calculated by dividing the quantity with 2. Second value is calculated by subtracting the value attained by dividing the daily demand with the production from 1.

Annual holding cost = Batch quantity2× Holding cost×(1-Daily demandProduction rate)

Annual holding cost = 762.5desserts2× $1.2×(1-82 desserts125 desserts)

Annual holding cost = 381.3 desserts × $1.2×0.344 desserts

Annual holding cost = $157.38

Hence, the annual holding cost is $157.38

Calculation of annual ordering cost:

It is calculated by multiplying the setup cost with the value attained by dividing the annual demand with the batch quantity.

Annual ordering cost = Annual demandBatch quantity× Setup cost

Annual ordering cost = 30,000 desserts762.5 desserts× $4 = 39.34desserts × $4 = $157.37

Hence, the annual ordering cost is $157.37

Calculation of total cost of inventory:

It is calculated by adding annual holding cost and annual ordering cost.

Total cost of inventory = Annual holding cost+ Annual ordering cost = $157.38+$157.37 = $314.7

Annual saving in the total cost of optimal order quantity:

It is calculated by subtracting the total cost of optimal quantity from the total cost of given batch quantity.

Annual saving = Total cost of given batch- Total cost of optimal order quantity

Annual saving = $461.9−$314.7 = $147.2

Hence, the annual saving is $147.2

Answer 15

b

Expert Solution

Answer 16

b

Expert Solution

Answer 17

Expert Solution

Answer 18

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

Answer 19

c

Summary Introduction

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

Answer 20

c

Expert Solution

Explanation of Solution

The plan to expand the capacity

The lowest inventory cost order size is 762 desserts. However, the refrigerator can only store 300 desserts. Thus, the capacity must increase 462 spaces.

Answer 21

c

Expert Solution

Answer 22

c

Expert Solution

Answer 23

Expert Solution

Answer 24

Ch. 10 - Prob. 1DQ Ch. 10 - Prob. 2DQ Ch. 10 - Prob. 3DQ Ch. 10 - Prob. 4DQ Ch. 10 - Prob. 5DQ Ch. 10 - Prob. 6DQ Ch. 10 - Prob. 1P Ch. 10 - Prob. 2P Ch. 10 - Prob. 3P Ch. 10 - Prob. 4P

Amount paid by the hotel for desert and frequency of production of desert under its current policy. Concept Introduction : Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Concept explainers

Videos

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Explanation of Solution

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Explanation of Solution

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

Amount paid by the hotel for desert and frequency of production of desert under its current policy. Concept Introduction : Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Concept explainers

Videos

Interpretation: Amount paid by the hotel for desert and frequency of production of desert under its current policy. Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Explanation of Solution

Interpretation: Order size required to minimize the total annual cost and amount of savings by using order size. Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Explanation of Solution

Interpretation: Change in size of refrigerated pantry. Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

Interpretation:

Amount paid by the hotel for desert and frequency of production of desert under its current policy.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Interpretation:

Order size required to minimize the total annual cost and amount of savings by using order size.

Concept Introduction: Materials Requirement Planning is a process in which planning is made for the requirement of raw material required for manufacturing of the finished product.

Interpretation:

Change in size of refrigerated pantry.

Concept Introduction: The efficiency of output is the actual productivity generated compared with the planned or effective capacity. It is usually calculated by dividing actual output by effective capacity.