05 Jul BA 357 Problem Set BSpring 2020 Due: 4/19/2020 mid
BA 357 Problem Set BSpring 2020 Due: 4/19/2020 midnight1Note: All data in this problem set are fictitious. An Excel spreadsheet containing data for Problem 2 is available at Canvas. Use two decimal places.Problem 1Black Moon is one of the top selling beers at Bottom of the Heel, a local restaurant and brewery in Chapel Hill. The manager of Bottom of the Heel asked you to help in determining the optimal ordering policy for Black Moon. The demand for this beer is 35 bottles per day. The store pays a unit cost of $3.50 per bottle and a fixed ordering cost of $130 per order. The annual unit holding cost of inventory is estimated to be 30% of the unit cost. The store operates 280 days a year.a. Determine the Economic Order Quantity (EOQ). Compute the time between two orders and the total annual relevant inventory cost (i.e., sum of holding and ordering costs) of Black Moon for Bottom of the Heel (pay attention to units).b. Compute the reorder point assuming that the order lead time is 3 workdays.c. Suppose that the supplier requires orders to be placed in multiples of 100 units. What order quantity would you now suggest to the store to meet the supplier’s mandate while minimizing total annual costs? What is the increase in the total annual relevant inventory cost due to this requirement compared to your answer in part (a)?BA 357 Problem Set BSpring 2020 Due: 4/19/2020 midnight2Problem 2Seoul Fashion is an apparel store located in Corvallis that mainly sells clothing for women. The following table provides the sales information for its products:ProductSKUMonthly DemandUnit Cost($)Ribbed Knit Sweater DressRKS-1013624.90Ribbed Knit Varsity-Trim DressRKVT-10115352.90Crocheted High-Neck DressCHN-1012332.90Trapeze DressTD-1018219.90Cutout Trim Maxi DressCTM-1014922.90Deep V-Cut DressDVC-1013529.90Elliatt Glow DressEG-10113150.00The Whitepepper Shark Cami DressTWSC-10117108.00Love Cat Lace Maxi DressLCLM-1015267.00ZIZTAR HK Taxi DressZHT-1014655.90Mock Neck Top and Overall Dress SetMNTO-1011947.90NYTT Tie-Dye Swim DressNTDS-10122342.00Cutout-Back Surplice MaxiCBSM-10123639.90Crochet Yoke Maxi DressCYM-1016237.90Mesh Overlay Sheath DressMOS-1017734.90Tiger Mist Cap Sleeve Maxi DressTMCSM-1012179.90Note: An Excel Spreadsheet with the above data table is available on Canvasa. Perform an ABC classification. Make sure that no more than 20% of the SKUs are classified as A, and no less than 50% of the SKUs are classified as C (with the remaining classified as B).b. Based on your classification in part (a), what percentage of the monthly sales value does each category (A, B and C) contribute to?BA 357 Problem Set BSpring 2020 Due: 4/19/2020 midnight3Problem 3Digital Plaza is a local electronics store. You are asked to determine the optimal ordering policy for Samsong 40 Inch LED TV. The weekly demand for this LED TV is normally distributed with a mean of 60 units and standard deviation of 15 units. The store follows the continuous review EOQ model to manage its inventory. Digital Plaza orders Samsong 40 Inch LED TV from the supplier at a unit cost of $240 and the fixed ordering cost of $220. The annual cost of carrying a unit of inventory at the store is equal to 25% of the unit cost. It takes 28 days to receive a delivery. Assume that a year has 52 weeks.(Note: z-values corresponding to standard normal probabilities can be calculated using Excel or can be found in the table provided at the end of the problem)a. How many Samsong 40 Inch LED TV’s should be included in each order Digital Plaza places for this LED TV? That is, compute the Compute the Economic Order Quantity that Digital Plaza should use (pay attention to units).b. Compute the safety stock (units of TV) needed to maintain a service level of 95%.c. What is the annual holding cost for carrying this safety stock?d. Compute the reorder point for 95% service level.e. How much additional safety stock would be needed if Digital Plaza wishes to increase the service level from 95% to 98%? What is the additional cost associated with this increase in the safety stock?Table of z-valuesProbabilityz-valueProbabilityz-value0.992.3260.891.2270.982.0540.881.1750.971.8810.871.1260.961.7510.861.0800.951.6450.851.0360.941.5550.840.9940.931.4760.830.9540.921.4050.820.9150.911.3410.810.8780.901.2820.800.842
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