EBK PRINCIPLES OF OPERATIONS MANAGEMENT
EBK PRINCIPLES OF OPERATIONS MANAGEMENT
10th Edition
ISBN: 8220102744059
Author: HEIZER
Publisher: PEARSON
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Chapter 12, Problem 23P
Summary Introduction

To determine: Whether the quantity discount must be taken or not.

Introduction:

Quantity discount model:

Quantity discount model is a scenario where manufacturing companies receive price discount for ordering large quantities. The firm will estimate if the discount quantity is profitable for the firm and make the decision.

Economic order quantity (EOQ):

EOQ is the quantity of units a company must add to its inventory so as to minimize the total inventory costs. It will determine the ideal order quantity which will decrease the inventory management costs.

Annual holding cost:

Annual holding cost is the cost involved in holding the excess inventory present within a firm. The excess inventory will be carried on for the next year and used for production.

Annual ordering cost:

Annual ordering cost is the cost involved in making a purchase order and the following up of that order. It will account for the labor involved and other associated costs.

Purchase cost:

Purchase cost is the cost incurred to purchase the require components to satisfy the demand of the firm. The cost will vary according to the demand.

Total cost:

Total cost is the overall cost taking into estimation of the holding, ordering and the purchase cost of the materials.

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Wang Distributors has an annual demand for an air-port metal detector of 1,400 units. The cost of a typical detector to Wang is $400. Carrying cost is estimated to be 20% of the unit cost,and the ordering cost is $25 per order. If Ping Wang, the owner,orders in quantities of 300 or more, he can get a 5% discount on thecost of the detectors. Should Wang take the quantity discount?
Meena Distributors has an annual demand for an airport metal detector of 1,420 units. The cost of a typical detector to Meena is ​$400. Carrying cost is estimated to be 19​% of the unit​ cost, and the ordering cost is ​$25 per order. If Purushottama Meena​, the​ owner, orders in quantities of 300 or​ more, he can get a 4​% discount on the cost of the detectors. Should Meena take the quantity​ discount? Part 2 What is the EOQ without the​ discount?   EOQ​ = enter your response here units ​(round your response to one decimal​ place). Part 3 Since the total cost with the discount is ▼   greater than less than the total cost without the​ discount, Meena ▼   should should not order 300 units at a time in order to qualify for the discount.
Meena Distributors has an annual demand for an airport metal detector of 1,400 units. The cost of a typical detector to Meena is $400. Carrying cost is estimated to be 20% of theunit cost, and the ordering cost is $25 per order. If Purushottama Meena, the owner, orders in quantities of 300 or more, he can get a 5% discount on the cost of the detectors. Should Meena take the  quantity discount?

Chapter 12 Solutions

EBK PRINCIPLES OF OPERATIONS MANAGEMENT

Ch. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Explain the following: All things being equal, the...Ch. 12 - Prob. 13DQCh. 12 - Prob. 14DQCh. 12 - Prob. 15DQCh. 12 - When demand is not constant, the reorder point is...Ch. 12 - Prob. 17DQCh. 12 - State a major advantage, and a major disadvantage,...Ch. 12 - L. Houts Plastics it a large manufacturer of...Ch. 12 - Prob. 2PCh. 12 - Jean-Mane Bourjollys restaurant has the following...Ch. 12 - Lindsay Electronics, a small manufacturer of...Ch. 12 - William Sevilles computer training school, in...Ch. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Matthew Liotines Dream Store sells beds and...Ch. 12 - Southeastern Bell stocks a certain switch...Ch. 12 - Lead time for one of your fastest-moving products...Ch. 12 - Annual demand for the notebook binders at Duncans...Ch. 12 - Thomas Kratzer is the purchasing manager for the...Ch. 12 - Joe Henrys machine shop uses 2,500 brackets during...Ch. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Cesar Rego Computers, a Mississippi chain of...Ch. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - M. P. VanOyen Manufacturing has gone out on bid...Ch. 12 - Chris Sandvig Irrigation, Inc., has summarized the...Ch. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Barbara Flynn is in charge of maintaining hospital...Ch. 12 - Prob. 42PCh. 12 - Authentic Thai rattan chairs (shown in the photo)...Ch. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Gainesville Cigar stocks Cuban agars that have...Ch. 12 - A gourmet coffee shop in downtown San Francisco is...Ch. 12 - Prob. 51PCh. 12 - Henrique Correas bakery prepares all its cakes...Ch. 12 - Prob. 53PCh. 12 - Prob. 1.1CSCh. 12 - Prob. 1.2CSCh. 12 - Prob. 1.3CSCh. 12 - Prob. 2.1CSCh. 12 - Prob. 2.2CSCh. 12 - Prob. 2.3CSCh. 12 - Managing Inventory at Frito-Lay Frito-Lay hat...Ch. 12 - Prob. 1.2VCCh. 12 - Prob. 1.3VCCh. 12 - Prob. 1.4VCCh. 12 - Prob. 1.5VCCh. 12 - Prob. 1.6VCCh. 12 - Managing Inventory at Frito-Lay Frito-Lay hat...Ch. 12 - Inventory Control at Wheeled Coach Controlling...Ch. 12 - Prob. 2.2VCCh. 12 - Inventory Control at Wheeled Coach Controlling...
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