Concept explainers
a)
To determine: The number of batches of heating element produced per year.
Introduction: Inventory is a stock or store of goods. Every company store lots of goods as inventory which will be used during replenishment periods. Management of inventory is so much essential to manage cost and also to reduce cost.
a)
Answer to Problem 12P
Explanation of Solution
Given information:
Formula:
Calculation of number of batches of heating element produced per year:
The number of batches of heating element produced per year is calculated by dividing the demand with the economic order quantity which is 75,000 is divided by 2,000 which yields the resultant as 38 batches per year.
Hence, the number of batches of heating element produced per year is 38 batches per year.
b)
To determine: The inventory on hand.
Introduction: Inventory is a stock or store of goods. Every company store lots of goods as inventory which will be used during replenishment periods. Management of inventory is so much essential to manage cost and also to reduce cost.
b)
Answer to Problem 12P
Explanation of Solution
Given information:
Calculation of inventory on hand:
Batch begins with no inventory on hand.
The inventory on hand after two days is calculated by adding the beginning inventory and inventory accumulated as a result of two days of production. Inventory after two days is calculated by finding the difference of number of units produced in two days (1,600) and number of units consumed in two days (600) which is 1,000 units.
Therefore, inventory after two days is obtained by adding 0 with 1,000 which gives 1,000units as the inventory after two days.
Hence, the inventory on hand is 1,000 units.
c)
To determine: The average inventory.
Introduction: Inventory is a stock or store of goods. Every company store lots of goods as inventory which will be used during replenishment periods. Management of inventory is so much essential to manage cost and also to reduce cost.
c)
Answer to Problem 12P
Explanation of Solution
Given information:
Formula:
Calculation of average inventory:
The average inventory is calculated by dividing 1,250 by 2 which yields 625 units.
Hence, the average inventory is 625 units.
d)
To explain: Whether there is adequate time to do the job between the production batches.
Introduction: Inventory is a stock or store of goods. Every company store lots of goods as inventory which will be used during replenishment periods. Management of inventory is so much essential to manage cost and also to reduce cost.
d)
Answer to Problem 12P
Explanation of Solution
Given information:
Formula:
Calculation to check whether there is adequate time to do the job between the production batches:
The other component must be completed within the consumption time of the heating element. The end of the consumption time is the moment when the inventory falls to 0 units. When the other component takes more than the consumption time, there will be lag in the inventory level.
The cycle time is calculated by dividing 2,000 with 300 which yields the resultant as 7 days.
The run time is calculated by dividing 2,000 by 800 and adding the resultant with setup time which yields 3 days.
Consumption time is calculated by subtracting run time of 7 with the consumption time of 3 which yields the resultant as 4days which is not sufficient since other component requires 4 days.
Hence, there will not be adequate time to run the other component.
Want to see more full solutions like this?
Chapter 13 Solutions
Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
- Which of the following is not a characteristic of intermittent production system? A. the flow of production is intermittent. B. the volume of production is generally small. C. a single product is manufactured in bulk. D. none of thesearrow_forwardA company that produces hair dryers buys some of the compnents, but it makes the heating element, which it can produce at the rate of 850 per day. Hair dryers are assembled daily, 250 days a year at a rate of 325 per day. Because of the disparity between the production and usuage rates, the heating elements are periodically produced in batches of 2,400 units. a. approx how many batches of heating elements are produced annually?arrow_forwardThe Northridge Company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a product K is very likely to get one from a competitor if Northridge Company doesn’t have one available immediately. Northridge Company’s current policy to produce the product K is to produce 100 per week, which is the average demand. Even this is a problem, as the production manager has pointed out, since the equipment is also used for other products and the lot size of 300 would be much more efficient. He said he is currently set up the production for product K for the next week and states that he has capacity available to produce 300 at a time next week. The following lists the forecasts and actual customer orders for the next 12 weeks. Week 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 90 120 110 80 85 95 100 110 90 90 100 110 Customer Orders 105 97 93 72 98 72 53 21…arrow_forward
- In the replenishment area, sales and order forecasts are needed to be performed and shared. Select one: a. True b. Falsearrow_forwardAtlanta Manufacturing Company produces products W, X, Y, and Z through a joint process. The joint costs amount to $250,000. Product Units Produced Sales Value at Split-Off Additional Costs of Processing Sales Value After Processing W 750 $10,000 $2,500 $15,000 X 1,500 $30,000 $3,000 $35,000 Y 1,000 $20,000 $4,000 $25,000 Z 1,500 $40,000 $6,000 $45,000 If W is processed further, profits of W will: 1) Increase by $2,500 2) Increase by $12,500 3) Decrease by $23,000 4) Increase by $5,000arrow_forwardI. The Northridge Company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a product K is very likely to get one from a competitor if Northridge Company doesn't have one available immediately. Northridge Company's current policy to produce the product K is to produce 100 per week, which is the average demand. Even this is a problem, as the production manager has pointed out, since the equipment is also used for other products and the lot size of 300 would be much more efficient. He said he is currently set up the production for product K for the next week and states that he has capacity available to produce 300 at a time next week. The following lists the forecasts and actual customer orders for the next 12 weeks. Week Forecast Customer Orders 1 2 3 90 120 110 105 97 93 4 5 6 7 8 80 110 85 95 100 90 72 98 72 53 21 17 9 10 11 90 100 6 2 12 110 5 The president of Northridge Company has said that he wants to…arrow_forward
- The definition of work-in-process (WIP) inventory is: Select one: a. An end item ready to be sold, but still an asset on the company's books. b. Products or components that are no longer raw materials but have not yet become finished products. c. Materials for maintenance, repair and operation. d. Materials that are normally purchased but have not yet entered the manufacturing process. and. Additional stock to allow for uneven demand; a buffer.arrow_forwardRefers to the range of the number of items produced by the operation over a given period of time.(1) Volume of output.(2) Variation of output.(3) Variety of output.(4) Transformation process.(5) Transmission procesarrow_forwardA company manufactures hair dryers. It buys some of the components, but it makes the heating elements, which it can produce at the rate of 800 per day. Hair dryers are assembled daily, 250 days a year, at a rate of 300 per day. Because of the disparity between the production and usage rates, the heating elements are periodically produced in batches of 2,000 units. Approximately how many batches of heating elements are produced annually? If production on a batch begins when there is no inventory of heating elements on hand, how much inventory will be on hand two days later? The same equipment that is used to make the heating elements could also be used to make a component for another of the firm’s products. That job would require four days, including setup. Setup time for making a batch of heating elements is a half day. Is there enough time to do this job between productions of batches of heating elements? Explain.arrow_forward
- Determine optimal number of needles to order D = 1,000 units S= $10 per order H= $.50 per unit per year Q* = 200 unitsarrow_forwardIt is costly to hold inventory, but inventory can also be useful in a process because:a. adding inventory to a process will shorten the average time a unit spends in a process.b. adding inventory to a process can help reduce situations in which sales are lost due touncertain demand.c. adding inventory to a process is likely to increase quality.d. adding inventory to a process will increase the profit margin of the item.arrow_forwarda) b) c) d) e) f) g) h) i) What is the optimal solution (in words? An additional 4 hours of shaper time became available. Evaluate the effect? Explain- Two hours of Grinder time was lost. Evaluate the effect? An additional 20 units of component 3 was requested. Evaluate the effect. The demand for component 2 decreased by 30 units. Evaluate the effect Suppose that the profit contribution of component 1 increases to $9.00. What is the new optimal solution? Suppose that the profit contribution of component 3 decrease by $2.00 . Would the optimal solution change Is the problem degenerate? Explain! Are there alternative optima in this problem? Explainarrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.