The optimal value of EOQ for the line of the greeting cards. Introduction: Economic order quantity refers to the approach which are used to evaluate flow and volume of order needed to fulfill consumers demand while reducing the cost per order.Such tool is used by the organization to handle andmanage operations and logistic operations.

Question

Want to see the full answer?

Answer 1

Question

Chapter 4, Problem 41AP

(a)

Summary Introduction

To determine:The optimal value of EOQ for the line of the greeting cards.

Introduction:

Economic order quantity refers to the approach which are used to evaluate flow and volume of order needed to fulfill consumers demand while reducing the cost per order.Such tool is used by the organization to handle andmanage operations and logistic operations.

(b)

Summary Introduction

To determine:The additional annual cost resulting from using the wrong production lo size.

Introduction: Economic order quantity refers to the approach which are used to evaluate flow and volume of order needed to fulfill consumers demand while reducing the cost per order.Such tool is used by the organization to handle andmanage operations and logistic operations.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The sales of Whole Care mouthwash at Tom's of Maine over the past six months have averaged 2,000 cases per month, which is the current order quantity. Tom's of Maine's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions a) What is EOQ? b) What is the cost reduction? c) What is the reorder point? d) What is Time between Orders (TBO)?

The sales of Whole Care mouthwash at Jen's of Michigan over the past six months have averaged 2,000 cases per month, which is the current order quantity. Jen's of Michigan's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year. Based on the above information please answer the following questions What is EOQ? What is the cost reduction? What is the reorder point? What is Time between Orders (TBO)?

You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. You are using a continuous review system to control this inventory. The supply lead time is 4 weeks. Placingan order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year.a. What is the optimal ordering quantity for this item?b. How many units of the item should be maintained as safety stock for 99 percent protection against stockouts during an order cycle?c. If supply lead time can be reduced to 2 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stockout protection?d. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly…