Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 4, Problem 40AP
Summary Introduction
To determine: The optimal order for the given six items, so that the storage space is never exceeded.
Introduction: Economic order quantity sometimes EOQ, refers to the technique used by the organizations to determine the volume and frequency or order needed to fulfill the customer demand while minimizing the cost of the item.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Catlea Merchandising is engaged in selling school shoesfor both boys and girls in their teenage years. Catlea needs 32,000 pairs of shoes in a year in order to satisfy the market demand. It costs ₱ 48 to place an order while ₱ 8 is needed to hold each quantity of shoe in Catlea's inventory. Upon checking on Catlea's supplier, it takes 8 days in between placing an order and eventually receiving it.
a. Determine the Economic Order Quantityb. Determine the number of order per monthc. Determine the reorder point
The Cove at UP recently hired Ray Bones as the new inventory replenishment manager. Ray is a recent Accounting graduate from the University of Portland and learned all about managing inventory in BUS 457.
Ray needs to determine the length-of the build up and sell thru periods associated with an optimal ordering policy for an item with constant annual demand of 2200 units, unit cost $3790.5, annual unit holding cost percentage 0.28, and aggregate order placement cost $425 for an item with a production rate of 3820 (units/year).
What are the cost minimizing order quantity and build up and sell thru periods?
(specify answer as a whole number)
(specify answer to 3 decimal places).
(specify answer to 3 decimal places).
For a specific farm implement ‘FI’ is to be ordered by a food processing company, following data is available:
Monthly Demand= 800 units
Purchase cost/unit = $40/unit
Ordering costs= $60/ order
Holding costs (Ch) = $12/unit/year, fire insurance = 6% of the unit cost, 2% other overheads.
Determine optimal order quantity of ‘FI’ items and how frequently the order should be placed?
Chapter 4 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 4.4 - Prob. 1PCh. 4.4 - Prob. 2PCh. 4.4 - Prob. 3PCh. 4.4 - Prob. 4PCh. 4.4 - Prob. 5PCh. 4.4 - Prob. 6PCh. 4.4 - Prob. 7PCh. 4.4 - Prob. 8PCh. 4.4 - Prob. 9PCh. 4.5 - Prob. 10P
Ch. 4.5 - Prob. 11PCh. 4.5 - Prob. 12PCh. 4.5 - Prob. 13PCh. 4.5 - Prob. 14PCh. 4.5 - Prob. 15PCh. 4.5 - Prob. 16PCh. 4.6 - Prob. 17PCh. 4.6 - Prob. 18PCh. 4.6 - Prob. 19PCh. 4.6 - Prob. 20PCh. 4.7 - Prob. 21PCh. 4.7 - Prob. 22PCh. 4.7 - Prob. 23PCh. 4.7 - Prob. 24PCh. 4.7 - Prob. 25PCh. 4.8 - Prob. 26PCh. 4.8 - Prob. 27PCh. 4.8 - Prob. 28PCh. 4.9 - Prob. 29PCh. 4.9 - Prob. 30PCh. 4 - Prob. 31APCh. 4 - Prob. 32APCh. 4 - Prob. 33APCh. 4 - Prob. 34APCh. 4 - Prob. 35APCh. 4 - Prob. 36APCh. 4 - Prob. 37APCh. 4 - Prob. 38APCh. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Prob. 45AP
Knowledge Booster
Learn more about
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
- The primary objective in determining the Economic Order Quantity (EOQ) for an item is to: O minimize the quantity of the item ordered from the supplier each time. O minimize the annual total inventory cost for that item. order the item from a supplier located in close proximity. O maximize the time between orders. O find a quick and easy way to answ dependent or independent. the lot sizing question, regardless of whether the demand for the item isarrow_forwardhelp pleasearrow_forwardPLEASE DO NOT GIVE SOLUTION IN IMAGE FORMATarrow_forward
- D and L produces high quality plain colored t-shirts and polo jerseys which it sells at its retail outlets across the island. These products are in high demand throughout the year as many companies and individuals purchase them singly and in bulk to have prints put on them. At one of the retail outlets, located in Chaguanas, the inventory manager notices that he often runs out of stock of black polo jerseys, more often than he likes. He decides that he would aim for a service probability of 97.5%. He places order every other Friday. Each order for the polos takes 5 days to arrive. Past records have shown that there is a daily demand of 20 with a standard deviation of 4. He would also like to ensure that every time he places an order, that he has in stock, 60 of the black polos on hand. The outlet is opened for 250 days for the year. It costs the outlet $80 dollars to place an order the polos. What size order should the manager place when ordering the black polos?arrow_forwardFush uses an average of 40 boxes of paper serviettes a day. The restaurant operates 260 days per year, storage and handling costs for the serviettes are $ 30 per year per box, and it costs approximately $60 to order and receive a shipment of serviettes. Except for rounding, are annual ordering costs and carrying costs always equal at the EOQ? The manager is currently using an order size of 200 boxes, but wants to make sure he is managing supplies "in a cost efficient manner". Would you recommend that the manager use the optimal order size instead of 200 boxes?arrow_forwardABC Ltd has forecasted demand for its product ‘AB’ to be 400,000 units for the following year. The existing policy of the firm is to order 20000 units at a time and the cost per order is Rs. 1600. The holding cost per unit is Rs 20 per unit per year. The firm is now considering to use the economic order quantity model (EOQ) to determine order size of the product ‘AB’. A buffer stock of 4000 units of product ‘AB’ will be maintained by the firm, irrespective of whether order are made according to existing policy or using the EOQ model. Calculate the inventory costs of ABC Ltd based on its existing ordering policy? Calculate the inventory costs of ABC Ltd using the EOQ and advise the firm whether the EOQ is beneficial to the firm? ABC is considering to adopt the ‘Just-in-time’ approach to manage its inventories. Explain fully the conditions that are important for a firm to be able to operate with ‘ Just in time’ approacharrow_forward
- Blade Breakers Ltd. manufactures blades. The following are the details of their operation during 2020: Average monthly market demand 2,000 blades Ordering costs $ 200 per order Inventory carrying costs 20% per annum Cost of lamps $ 1000 per blade Normal usage 100 blades per week Minimum usage 50 blades per week Maximum usage 200 blades per week Lead time to supply 4 - 6 weeks Compute: Economic order quantity. Maximum level of stock. Minimum level of stock. Re-order level of stock. What tradeoffs in costs are involved in computing the Economic Order Quantity?arrow_forwardJill's Job Shop buys two parts (Tegdiws and Widgets) for use in its production system from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data for both products are as follows: A. Find the total inventory costs if using inventory policy. This is a case considering safety stock (make sure to use the right formula)arrow_forwardAnnual demand for squash racquets is 50,000 units, and carrying costs amount to P2 per unit. Order costs for the company amount to P5. The optimum order quantity in units for squash racquets is (rounded to the nearest unit):arrow_forward
- Lindsay Electronics, a small manufacturer of electronic research equipment, has approximately 7,100 items in its inventory and has hired Joan Blasco-Paul to manage its inventory. Joan has determined that 8% of the items in inventory are A items, 30% are B items, and 62% are C items. She would like to set up a system in which all A items are counted monthly (every 21 working days), all B items are counted quarterly (every 60 working days), and all C items are counted semiannually (every 124 working days). How many items need to be counted each day? The total number of items that need to be counted each day is items (round your response to the nearest whole number).arrow_forwardProblem #2-Jasper Inc. has four different air conditioning SKUS: J101, J102, J103 and J104. The following four questions requires you to provide recommendation to their approach for safety stock and reorder point for these SKUs. a. SKU J101 has a demand that is normally distributed during the lead time, with a mean of 450 units and standard deviation of 5. If Jasper cannot have stockouts in more than 10% of the time in any order, how much safety stock should be maintained and at what reorder point? Given Mean=450 units Standard deviation-5 Confidence level 90% The formula to calculate safely stock is: S=ZX STD. dev. of lead timex avg demand. For 90% level zone z-score is S= S= x5 x 450 units b. Calculate the safety stock and reorder point for SKU J102, assuming that its daily demand is normally distributed with a mean of 20, standard deviation of 2, lead time is 3 days, and must operate at 95% service level. Calculate the safety stock and reorder point for SKU J102, assuming its daily…arrow_forwardWeekly demand for printers at a store is normally distributed with a mean of 250 and a standard deviation of 96. The store manager continuously monitors inventory and currently orders 14400 printers each time the inventory drops to 1,000printers. The supply lead time is normally distributed with a mean of 2 weeks and a standard deviation of 1.5 weeks. a.How much safety inventory should this store carry if it wants to provide a CSL of 95%? b.How does the required safety inventory change as the standard deviation of lead time is reduced from 1.5 weeks to zero in intervals of 0.5 weeks? c.What fill rate does the store achieve?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY