Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
12th Edition
ISBN: 9781259580093
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 13, Problem 8P
A food processor uses approximately 27,000 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding cost is 18 cents per jar, and reordering cost is $60 per order. The company operates an average of 20 days a month.
a. What penalty is the company incurring by its present order size?
b. The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost. What ordering cost would enable the manager to justify ordering every other day (i.e., 10 times a month)?
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Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 112, 500 units per year, an ordering cost of $3 per order, and carrying costs of $1.20 per unit. a. What is the economic ordering quantity? b. How many orders will be placed during the year? c. What will the average inventory be? d. What is the total cost of ordering and carrying inventory?
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Chapter 13 Solutions
Loose-leaf for Operations Management (The Mcgraw-hill Series in Operations and Decision Sciences)
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