Concept explainers
a)
To calculate: The economic production quantity (EPQ).
Introduction:
Economic production quantity (EPQ):
The economic production quantity is used to determine the amount a company or a retail outlet should purchase at every order so as to minimize the associated total inventory costs. It is done by balancing the holding cost and the ordering cost.
a)

Answer to Problem 18P
The economic production quantity (EPQ) is 671 units.
Explanation of Solution
Given information:
Annual Demand (D) = 12,500 units
Number of working days (N) = 250 / year
Holding cost (H) = $2 / unit / year
Ordering cost (S) = 30 / order
Daily production (p) = 300 / day
Formula to calculate EPQ:
Calculation of EPQ:
Hence, the economic production quantity (EPQ) is 671 units.
b)
To calculate: The number of production runs per year.
Introduction:
Production runs:
The production run is the development of similar or associated goods by utilizing a particular approach or processes.
b)

Answer to Problem 18P
The number of production runs per yearis 18.63.
Explanation of Solution
Given information:
Annual Demand (D) = 12,500 units
Number of working days (N) = 250 / year
Holding cost (H) = $2 / unit / year
Ordering cost (S) = 30 / order
Daily production (p) = 300 / day
Formula to calculate number of production runs:
Calculation of number of production runs:
Hence, the number of production runs per year is 18.63.
c)
To calculate: The maximum inventory level.
Introduction:
Maximum inventory level:
The maximum inventory level is the level of inventory in a firm which should not be exceeded at any circumstances. It is to ensure that the cost of capital is not increased.
c)

Answer to Problem 18P
The maximum inventory level is 559 units.
Explanation of Solution
Given information:
Annual Demand (D) = 12,500 units
Number of working days (N) = 250 / year
Holding cost (H) = $2 / unit / year
Ordering cost (S) = 30 / order
Daily production (p) = 300 / day
Formula to calculate maximum inventory level:
Calculation of maximum inventory level:
Hence, the maximum inventory level is 559 units.
d)
To determine: The percentage of time the facility will be producing components.
d)

Answer to Problem 18P
The percentage of time the facility will be producing componentsis 16.7%.
Explanation of Solution
Given information:
Annual Demand (D) = 12,500 units
Number of working days (N) = 250 / year
Holding cost (H) = $2 / unit / year
Ordering cost (S) = 30 / order
Daily production (p) = 300 / day
Formula to calculate days of demand:
Formula to calculate days of production:
Calculation of days of demand satisfied by each production run:
Calculation of days in production for each order:
Calculation of percent time of production:
The percentage of the time the facility is producing components is calculated by dividing the days in production by the days of demand.
Hence, the percentage of time the facility will be producing components is 16.7%.
e)
To determine: The annual cost of ordering and holding inventory.
e)

Answer to Problem 18P
The annual cost of ordering and holding inventory is $1,117.90
Explanation of Solution
Given information:
Annual Demand (D) = 12,500 units
Number of working days (N) = 250 / year
Holding cost (H) = $2 / unit / year
Ordering cost (S) = 30 / order
Daily production (p) = 300 / day
Formula to calculate the annual cost of ordering and holding inventory:
Calculation of annual cost of ordering and holding inventory:
Hence, the annual cost of ordering and holding inventory is $1,117.90.
Want to see more full solutions like this?
Chapter 12 Solutions
PRIN.OF OPERATIONS MANAGEMENT-MYOMLAB
- Following their early success and growth, Listo hired a number of new managers and employees. In response to the expansion of staff, Listo reorganized by adding layers of supervisors and managers between executive management and line staff; however, growth occurred so rapidly that proper training was not provided to the new employees. Management was less concerned with the employees’ opinions and was more focused on production and profit. Instead of enlisting employees’ opinions, more directive orders were given. The change and increased complexity associated with adding new layers to the hierarchy resulted in the organization’s goals and objectives becoming unclear. Employees began to complain about the new bureaucratic processes and the slow pace of decision-making. While the organization has been growing in size, productivity has slowed and quality has decreased. The turnover rate is higher than it has ever been, and the number of sick days that people take has doubled over the past…arrow_forwardFollowing their early success and growth, Listo hired a number of new managers and employees. In response to the expansion of staff, Listo reorganized by adding layers of supervisors and managers between executive management and line staff; however, growth occurred so rapidly that proper training was not provided to the new employees. Management was less concerned with the employees’ opinions and was more focused on production and profit. Instead of enlisting employees’ opinions, more directive orders were given. The change and increased complexity associated with adding new layers to the hierarchy resulted in the organization’s goals and objectives becoming unclear. Employees began to complain about the new bureaucratic processes and the slow pace of decision-making. While the organization has been growing in size, productivity has slowed and quality has decreased. The turnover rate is higher than it has ever been, and the number of sick days that people take has doubled over the past…arrow_forwardDiscuss in detail any five types of authority. give citations and referencearrow_forward
- Can you guys help me with this? Thank you! Business Environment: Provide insights into the guidelines for conducting business in the chosen country and working there as an expatriate. This information is vital for understanding the practicalities of engagement in that particular environment. The country in here is India Put the answer as bullet points, provide sources that have relevant information for the answer on economic factorsarrow_forwardCan you guys help me with this? Thank you! Intriguing Facts: Incorporate engaging facts about the country that enhance its value and uniqueness within the global supply chain landscape. These can include cultural anecdotes, technological innovations, or historical achievements. The country in here is India Put the answer as bullet points, provide sources that have relevant information for the answer on economic factorsarrow_forwardCan you guys help me with this? Thank you! Economic Factors: Evaluate the country's economic performance by analyzing key indicators such as GDP (Gross Domestic Product), GDP per capita, exports, and imports. These metrics provide insight into the country's economic prowess and its position in global trade. The country in here is India Put the answer as bullet points, provide sources that have relevant information for the answer on economic factorsarrow_forward
- provide scholarly reseach and define legal and complince risk and reputational risk in banking. Additionally 1. What more can be done about it 2. the department where the risk is exposed to 3. what strategy can be used 4. responsible personarrow_forwardRead the case in the link below and Develop a risk management programme appropriate for this case using the attached template. https://finopsinfo.com/investors/citis-900m-blunder-casts-light-on-poor-loan-ops/arrow_forwardDo the inherent differences between private and public sector objectives—profit versus publicgood—render private sector category management practices unsuitable for public sectorpurchasing, where open tendering is the norm?You have now undergone the Category Management classes and your superiors have requestedfor your input on how to integrate some of the learnings into the public sector policy. Discuss and elaborate what are the activities and governance you would introduce in yourrecommendations without violating the principle of transparency and accountability withinyour organisation. This is based on Singapore context. Pls provide a draft with explanation, examples and useful links for learning purposes. Citations will be good too. This is a module in SUSS called category management and supplier evaluationarrow_forward
- provide scholarly answers for what risk was associated with the Citibank bank loosing 50 million in August 2020arrow_forwardConclusion: The report recommendations and broad conclusion to the essay. TOTAL 5 100arrow_forwardAs part of your new role, as a strategy consultant and member of the steering committee, discuss what logistics and transportation strategies you will execute to achieve operational efficiencies and facilitate economic growth in SA. The committee would like to have a implementable strategic transport and logistics plan to realise the roadmap vision based on the subsection numbering given below! QUESTION ONE Introduction: Must include an overview and history of South Africa's Road, rail and freight transport network. Marks 5arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningPractical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
- MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational PublishingContemporary MarketingMarketingISBN:9780357033777Author:Louis E. Boone, David L. KurtzPublisher:Cengage Learning


