This assignment requires knowledge of inventory management concepts (Module 3).
You can
refer to the solved practice problems to see examples of solutions and of how
you can show calculations and providing reasoning as part of your responses.
Question
1 6 pts
The information in this paragraph applies to this question and
the 5 questions that follow (so, questions 1-6).
The daily demand for the
Savonera bar soap, one of the luxury brands manufactured by Mellow Cosmetics
Company, is 146 soap bars.
The cost of a single soap
bar is $2.50.
The rate of holding cost
per unit per day, which includes opportunity cost of investment and
deterioration of a soap bar when in storage, is 1% of the cost of the soap bar.
The cost of setting up
machinery for making a batch of the Savonera soap bar, which includes changing
the materials and tools, and wastage of initial test quantities, is $46 per
setup. Note that setting up cost is equivalent to the ordering cost.
The company currently
uses an arbitrary batch size of 6,000 for making Savonera bars of soap. Based
on this batch size and the information provided earlier, please calculate and
report the daily inventory holding (carrying) cost for Mellow Cosmetics
Company.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.
Question
2 6 pts
Based
on the arbitrary batch size of 6,000 bars of Savonera soap and the information
provided earlier, please calculate and report the total daily cost of setups
(ordering) for Mellow Cosmetics Company.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.
Question
3 6 pts
The
management of Mellow Cosmetics Company has requested your help for
systematically figuring out the batch size for Savonera soap to replace their
arbitrary batch size. Based on the demand and costs information provided
earlier, please help by calculating and reporting the Economic Order Quantity
(EOQ) for the batch size that you would recommend for manufacturing Savonera
soap bars.
Remember to show your
work including any formula you use.
Round your final answer
to the nearest integer value.
Bold
your final answer.
Question
4 6 pts
Using
the EOQ batch size that you calculated for Savonera bars of soap, please
calculate and report the daily inventory holding (carrying) cost for Mellow
Cosmetics Company.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.
Using
the EOQ batch size that you calculated for Savonera bars of soap, please
calculate and report the total daily cost of setups (ordering) for Mellow
Cosmetics Company.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.
Question
6 6 pts
Compare
the total daily cost of inventory management (holding + setup cost) for the two
quantities (6,000 and the EOQ you calculated), i.e., calculate and report the
difference in the total daily costs of inventory management using the two
different quantities.
Bold your final answer
for the difference amount.
Based
on your knowledge of the idea behind EOQ, please explain the reason for the
difference (in words in two or three sentences – not in terms of reconciling
the differences mathematically).
Question
7 6 pts
Please
read the information carefully to answer the question.
Workshop manager Shinji
Suzuki has noted that the daily demand for the StoryKore bibimbap pots
(dolsots) produced and sold by his business, Pandamonium International
Cookware, located in southwest Champaign, is fixed at 24 pots per day.
The lead time for
producing the pots is 4 days.
Shinji Suzuki would like
your help in figuring out the following about managing inventory.
Based on the information
provided, please calculate and report the reorder point.
Remember to show your
work including any formula you use.
Round your final answer
to the nearest whole number.
Bold
your final answer.
Question
8 6 pts
The
following information is required for answering questions 8-10.
Cold Stone, an ice cream
store in central Illinois, sells several varieties of popular ice creams in its
neighborhood villages. The following data pertains to the year 2023.
·
The annual sales revenue of the store is $4
million. The annual cost of all the goods sold is $3 million.
·
The beginning inventory on January 01 is $0.5
million. The ending inventory on December 31 is $0.3 million.
·
The beginning accounts receivables on January
01 is $0.2 million. The ending accounts receivables on December 31 is $0.1
million.
·
The beginning accounts payables on January 01
is $0.3 million. The ending accounts payables on December 31 is $0 million.
Compute the Days of
Inventory carried by the store.
Remember to show your
work including any formula you use.
Round your final answer to
two spaces (if needed) after the decimal.
Bold
your final answer.
Question
9 6 pts
Refer to the information in Question 8.
Compute the Days of
Receivables and the Days of Payables for the store.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.
Question
10 6 pts
Compute
the Cash-to-Cash cycle of Cold Stone.
Remember to show your
work including any formula you use.
Round your final answer
to two spaces (if needed) after the decimal.
Bold
your final answer.