Operations Management, Binder Ready Version: An Integrated Approach
Operations Management, Binder Ready Version: An Integrated Approach
6th Edition
ISBN: 9781118952610
Author: R. Dan Reid, Nada R. Sanders
Publisher: WILEY
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Chapter 12, Problem 1.1CQ
Summary Introduction

Interpretation:

The information about the total annual cost of the current ordering policy for part number 650810/ss/R9/o.

Concept Introduction:

The ordering cost is determined by taking the annual demand (D) by the crates per order Q0 , and then multiplying by the given cost per order ( S ).Calculation of annual cost inventory will rearrange the average lot size and remove such large shortage as the company is facing now. The ordering cost will be reduced.

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