Problem 13-9

The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF
supplies hot dogs to local restaurants at a steady rate of 280 per day. The cost to prepare the
equipment for producing hot dogs is $66. Annual holding costs are 45 cents per hot dog. The
factory operates 292 days a year.

a.
Find the optimal run size. (Do not round intermediate calculations. Round your answer to
the nearest whole number.)

Optimal run size

5040

b.
Find the number of runs per year. (Round your answer to the nearest whole number.)

Number of runs

16

c.
Find the length (in days) of a run. (Round your answer to the nearest whole number.)

Run length (in

days)

Problem 13-13
A mail-order house uses 16,060 boxes a year. Carrying costs are 60 cents per box a year, and
ordering costs are $96. The following price schedule applies.

Number of Boxes
1,000 to 1,999
2,000 to 4,999
5,000 to 9,999
10,000 or more

Price per Box

$1.25
1.20
1.15
1.10

a.
Determine the optimal order quantity. (Round your answer to the nearest whole number.)

Optimal order
quantity

boxes
10,000

b.
Determine the number of orders per year. (Round your answer to 2 decimal places.)

Number of order

per year
1.61

Problem 13-17
A manager just received a new price list from a supplier. It will now cost $1.00 a box for order
quantities of 801 or more boxes, $1.10 a box for 200 to 800 boxes, and $1.20 a box for smaller
quantities. Ordering cost is $80 per order and carrying costs are $10 per box a year. The firm
uses 3,600 boxes a year. The manager has suggested a round number order size of 800 boxes.
The managers rationale is that with a U-shaped cost curve that is fairly flat at its minimum, the
difference in total annual cost between 800 and 801 units would be small anyway. What order
size would you recommend? (Round intermediate calculations to 2 decimal places and final
answer to the nearest whole number.)

Recommended order
size

240

Problem 13-18
A newspaper publisher uses roughly 860 feet of baling wire each day to secure bundles of
newspapers while they are being distributed to carriers. The paper is published Monday through
Saturday. Lead time is six workdays. What is the appropriate reorder point quantity, given that
the company desires a service level of 95 percent, if that stockout risk for various levels of
safety stock is as follows: 1,500 feet, .10; 1,900 feet, .05; 2,100 feet, .02; and 2,400 feet, .01?

ft

Appropriate reorder
point

7,060

Problem 13-31
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service
level of .98. The order interval is 12 days, and lead time is 2 days. Average demand for one item
is 68 units per day, and the standard deviation of demand is 7 units per day. Given the on-hand
inventory at the reorder time for each order cycle shown in the following table.
Use Table.

Cycle On Hand
1
44
2
12
3
103

Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest
whole number)

Cycle

Units

962

994

903