PART 2 (Inventory Management) Daisy the Dancing Doe CowboyThon (cowboython.org)

Question

PART 2 (Inventory Management) Daisy the Dancing Doe CowboyThon (cowboython.org) is a fundraiser at a major university in the southern US that raises money for the Oklahoma Children's Hospital Foundation. Daisy the Dancing dog is in charge of selling hotdogs on the lawn in front of the library. At the stand, Daisy mostly handles marketing by greeting people in a hotdog suit and then assisting any students who can't finish the hotdogs they purchase (Daisy believe in providing a full-service operation) Daisy had to go through kitchen manager training to run the hotdog stand, so she knows that proper storage of meat products is very important. To provide that cold storage and handling, a local restaurant charges one cent per hotdog per calendar day and Madison, Daisy's assistant, has a calendar that shows 365 days per year. The same restaurant has the food contracts with vendors, so they handle the orders, but charge $60 to process, receive, and put each order in their freezer on top of their storage costs. Daisy holds hotdog sales throughout the year, but is very selective about her days. She averages 160 sale days per year, with an average of 263 hotdogs sold on each day. Daisy is very concerned about storage and ordering costs as hotdog sales are likely to increase when people discover that by sharing a hotdog with her on the library lawn they can support the kids. Daisy is thinking that something like the table on the right might allow her to figure out important metrics and see how they would change as the inputs change over time

Explanation / Answer

Ans E.

d Per day demand 263 D =d*160 Demand Total 42080 units per annual K Ordering cost 60 $ per order h Holding cost at 25% 0.01 $ per unit per year EOQ (Sqrt(2*k*D/h) 22471.32 Ans A 22471 units AI Average inventory 11236 units EOQ/2 (AI*h) Holding cost 112.3566 $ N=D/EOQ No of orders 1.87261 times Total orders/EOQ Ans B Toc Total ordering cost annualy 112.3566 $ Thc Annual Holding cost 112.3566 $ THOC Total costs 224.7132 $ (Toc+Thc) Ans C (160/N) Cycle days 85.44226 days Ans D

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