Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
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Chapter 12, Problem 37P
Summary Introduction
To determine: The number of knives to be produced in each batch.
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3) A company produces a part that is used in its production process. The company produces the
part at a rate of 300 units per day. The daily demand for the product is 180 units. The annual
demand for the part is 54,000 units and occurs consistently over the 300 days that the company
operates yearly. The company incurs a setup cost of $300 each time the item is produced. The
cost of carrying the item in inventory is estimated to be 25 percent of the item's $100 cost. How
many units should the company produce each production run to minimize its inventory-
associated costs?
Emarpy Appliance is a company which produces all kinds of major.
Bud Banis, the president of Emarpy, is concerned about the production policy for the company’s bestselling refrigerator. The annual demand for this has been about 8,000 units each year, and this demand has been constant throughout the year. The production capacity is 200 units per day. Each time production starts, it costs the company $120 to move materials into place, reset the assembly line, and clean the equipment. The holding cost of a refrigerator is $50 per year. The current production plan calls for 400 refrigerators to be produced in each production run. Assume there are 250 working days per year. (b) If the company were to continue to produce 400 units each time production starts, how many days would production continue?
(c) Under the current policy, how many production runs per year would be required? What would the annual set-up cost be?
(d) If the current policy continues, how many refrigerators would be…
Merlita works for a local ceramics company. She just completed her accountancy degree and learned the EOQ model in one of her subjects. She suggested to her employer to adopt it. The company sells 20,000 pieces of specialty ceramic items each year. Traditionally, they have produced these items four times a year, making 5,000 pieces at a time. They carry no safety stock as customers do not mind waiting for orders. The average piece of ceramic items costs P400 to make and costs the company P20 to carry in inventory for a year. The set up costs for each production run total P80. The company should
a. Continue the existing system due to P38,950 advantage.
b. Adopt EOQ due to savings of P35,675.
c. Adopt EOQ due to savings of P42,320.
d. Continue the existing system due to P41,820 advantage.
Chapter 12 Solutions
Principles Of Operations Management
Ch. 12 - Ethical Dilemma Wayne Hills Hospital in tiny...Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - What is the purpose of the ABC classification...Ch. 12 - Prob. 4DQCh. 12 - Explain the major assumptions of the basic EOQ...Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - What impact does a decrease in setup time hive on...
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 - Prob. 5PCh. 12 - Prob. 6PCh. 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 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 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. 50PCh. 12 - Prob. 51PCh. 12 - Henrique Correas bakery prepares all its cakes...Ch. 12 - Prob. 53PCh. 12 - Prob. 1CSCh. 12 - Prob. 2CSCh. 12 - Prob. 3CSCh. 12 - Prob. 1.1VCCh. 12 - Prob. 1.2VCCh. 12 - Prob. 1.3VCCh. 12 - Prob. 1.4VCCh. 12 - Prob. 1.5VCCh. 12 - Prob. 1.6VCCh. 12 - Prob. 1.7VCCh. 12 - Prob. 2.1VCCh. 12 - Prob. 2.2VCCh. 12 - Prob. 2.3VCCh. 12 - Prob. 2.4VCCh. 12 - Inventory Control at Wheeled Coach Controlling...Ch. 12 - Prob. 3.2VCCh. 12 - Inventory Control at Wheeled Coach Controlling...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- A shoe manufacturer uses 2,000 rubber soles per year for its popular shoe line. The firm makes its own soles, which it can produce at a rate of 90 per day. The shoes are assembled uniformly over the entire year. Carrying cost is $4 per sole a year. Setup cost for a production run of soles is $20. The firm operates 200 days per year. Determine cycle time for the optimal run size. I am having trouble with this question, Can anyone help? thank you.arrow_forwardAn oil refinery buys crude oil on a long-term supply contract for $22.50 per barrel.When shipments of crude oil are made to the refinery, they arrive at the rate of10,000 barrels per day. The refinery uses the oil at a rate of 5,000 barrels per dayand plans to purchase 500,000 barrels of crude oil next year. If the carrying cost is25percent of acquisition cost per unit per year and the ordering cost is $7,500 perorder:a. What is the EOQ for the crude oil?b. What is the TSC at EOQ?c. How many days of production are supported by each order of crude oil?d. How much storage capacity is needed for the crude oil?arrow_forwardA company processes feathers and ships them loose in a covered truck. The linehaul cost for an average shipment is $600, and the truck carries 2000 pounds offeathers. A bright new graduate has just been hired and has suggested that theyshould bale the feathers into 500-pound bales. This would make them easier tohandle and also allow them to be compressed into about one-tenth of the space theynow occupy. How many pounds of feathers can the truck now carry? What is thepresent line haul cost per pound? What will it be if the proposal is adopted?arrow_forward
- What is the average inventory? What is the average flow time? What is the required safety inventory to achieve the desired service level? What is the required re-order point to achieve the desired service level?arrow_forwardConsider a fixed period inventory model. The daily demand of the product has a mean of 30 and standard deviation of 4; orders are placed every 18 days and shipment lead time is 6 days. The store has a service policy of 96%. What is the inventory required?arrow_forward6000 units of a part are needed every year. Currently, this part is manufactured internally. Each production run costs 500 dollars to set up. The part costs 5 dollars. The carrying cost is 10% per year. The company has the option of ordering this part from another company. This would increase the part’s cost to 6 dollars, although the fixed cost of ordering would be low at 300 dollars per order. Should the company continue manufacturing the part, or order it? Show your calculations.arrow_forward
- A producer of electronic parts wants to take account of both production rate and demand rate in deciding on its lot sizes. A particular $50 part can be produced at a rate of 1000 units per month, and the demand rate is 200 units per month. The firm uses a carrying charge of 24 percent a year, and the setup cost is $200 each time the part is produced.a. What lot size should be produced?b. If the production rate is ignored, what would the lot size be? How much does this smaller lot size cost the firm on an annual basis?c. Draw a graph of on-hand inventory versus timearrow_forwardGive typing answer with explanation and conclusionarrow_forwardRoyalTech's South Jersey warehouse faces a daily demand that is normally distributed, with mean 1,000 and standard deviation 100 pallets. RoyalTech's supplier has a lead-time that is normally distributed, with mean 5 days and standard deviation 1 day. RoyalTech reviews its inventory periodically, that is, every 7 days. (Hint: think about the inventory model appropriate here) RoyalTech's warehouse runs 365 days a year, and the cost of carrying inventory is 18.25% per year. The supplier charges RoyalTech $2,000 per pallet, and $5,000 per delivery. RoyalTech plans to maintain 98% SL. NORMSINV(0.98) = 2.054. L(2.054) = 0.0073. Answer the following questions. 1. How much safety stock should Royal Tech carry? [Select] v pallets. 2. What is RoyalTech's average inventory? [ Select ] pallets. 3. What is the total relevant cost incurred by RoyalTech per day? $ [ Select] 4. What is the Fill Rate that RoyalTech is able to achieve for this service level? [ Select ]arrow_forward
- A Printed Circuit Board (PCB) machine installs integrated circuits onto a board. Before starting to produce a board, the PCB machine requires a 20-minute setup. Once in production, the PCB machine requires only 0.15 minute per board. Assume there is ample demand. Say the PCB machine produces 200 boards between setups and demand is 2 boards per minute. Given this operating process, what is the average inventory of boards at the PCB machine? answer:________arrow_forwardhelp me with parts a,b,c. and explain pleasearrow_forwardYOZECH Enterprise is frequently losing sales due to stock-outs. To avoid this problem, the owner likes to implement a new system of maintaining an inventory level which will include a safety stock. After looking into the past records of the company, it was determined that the normal usage during the lead time of 12 days is 120 units while the maximum usage is 150 units for 15 days. Based on the given information, what should be the safety stock of YOZECH Enterprise? What is the ROP (Re-order point)?arrow_forward
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