INVENTORY MANAGEMENT
ANSWER ALL QUESTIONS AND SHOW WORK. FOR QUESTION 3 MAKE SURE TO SUPPORT YOUR RESPONSE WITH ADDITIONAL REFERENCES
ANSWER THE FOLLOWING QUESTIONS:
1. The Churrozilla FOOD Truck produces specialty churros that are primarily sold at special events, such as football games and concerts. Ricky, the owner, is trying to decide how many to produce for an upcoming game. During the game, Ricky can sell Churros for $3 each ($36 per dozen). His competition is selling soft pretzels for $9 each, so Ricky thinks he’s giving the fans a bargain. However, when the game ends, any remaining churro dough is sold for $1 each ($12 a dozen). It costs Ricky $15 to buy and make a dozen churros. It sounds expensive, but includes the cost of the vehicle, the fees that the stadium charges for the right to sell, in addition to the cost of the ingredients and supplies to make the churros. Ricky’s estimate of demand for churros (in dozens) is the following:
Demand (in dozens) Probability
1800 dozen 0.05
2000 0.10
2200 0.15
2400 0.25
2600 0.30
2800 0.10
3000 0.05
Questions: Show all work (calculations and things like that)
1. What is the service rate (or optimal fractile)?
2. How many churros (to the nearest hundred dozen) should Ricky produce for the upcoming game?
2. Tina’s Coffee Emporium wishes to determine the best order size for its best -selling Barista Espresso maker by Gastroback (Model TS111). Tina has estimated the annual demand for this model at 7600 units. Her cost to carry one unit is $100 per year per unit, and she has estimated that each order costs $20 to place.
Question: Show all work (calculations and things like that)
1. Using the EOQ model, how many should Tina order each time?
3. With regard to the above inventory models,
Questions: Support answer with additional references
1. describe why you would use one model in preference to the other.
2. Explain why we need more than one inventory model to forecast ordering policy
