(Solution) : A toy manufacturer uses approximately 32,000 silicon chips


A toy manufacturer uses approximately 32,000 silicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is S3 per chip, and ordering cost is $120. Determine The optimal order quantity. The number of workdays in an order cycle. A small manufacturing firm uses roughly 3,400 pounds of chemical dye a year. Currently the firm purchases 300 pounds per order and pays $3 per pound. The supplier has just announced that orders of 1,000 pounds or more will be filled at a price of $2 per pound. The manufacturing firm incurs a cost of $100 each time it submits an order and assigns an annual holding cost of 17 percent of the purchase price per pound. Determine the order size that will minimize the total cost. If the supplier offered the discount at 1,500 pounds instead of 1,000 pounds, what order size would minimize total cost? D = 3,400 pounds per year S = $100 per order H = .17P A HOTEL uses approximately 600 bars of soap each day, and this tends to be fairly constant. Lead time for soap delivery is normally distributed with a mean of six days and a standard deviation of two days. A service level of 90 percent is desired. Find the ROP. How many days of supply are on hand at the ROP?

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Expert Answer

Annual Chips


Operating Days


Annual Holding Cost/chip

$ 3.00

Ordering Cost

$ 120.00


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