The purchasing manager for the Pacific Steel Companymust determine a policy for ordering coal to operate 12converters. Each converter requires exactly 5 tons of coalper day to operate, and the firm operates 360 days per year.The purchasing manager has determined that the orderingcost is $80 per order, and the cost of holding coal is 20% ofthe average dollar value of inventory held. The purchasingmanager has negotiated a contract to obtain the coal for$12 per ton for the coming year.a. Determine the optimal quantity of coal to receive in eachorder.b. Determine the total inventory-related costs associatedwith the optimal ordering policy (do not include the costof the coal).c. If five days’ lead time is required to receive an order ofcoal, how much coal should be on hand when an order isplaced?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
The purchasing manager for the Pacific Steel Company
must determine a policy for ordering coal to operate 12
converters. Each converter requires exactly 5 tons of coal
per day to operate, and the firm operates 360 days per year.
The purchasing manager has determined that the ordering
cost is $80 per order, and the cost of holding coal is 20% of
the average dollar value of inventory held. The purchasing
manager has negotiated a contract to obtain the coal for
$12 per ton for the coming year.
a. Determine the optimal quantity of coal to receive in each
order.
b. Determine the total inventory-related costs associated
with the optimal ordering policy (do not include the cost
of the coal).c. If five days’ lead time is required to receive an order of
coal, how much coal should be on hand when an order is
placed?
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