Operations Management: Processes and Supply Chains (11th Edition)
Operations Management: Processes and Supply Chains (11th Edition)
11th Edition
ISBN: 9780133872132
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter C, Problem 2P

A

Summary Introduction

Interpretation: The economic production lot size (ELS) is to be calculated.

Concept Introduction: ELS (economic production lot size) refers to lot size where total cost is minimum on consideration of balance between ordering cost and carrying cost

B

Summary Introduction

Interpretation: The setup cost and inventory holding cost per annum are to be calculated.

Concept Introduction: Setup is the cost to borne by the company for making ready of machinery to produce a fresh batch of goodsand inventory holding cost refers to costs associated with unsold stock

C

Summary Introduction

Interpretation: The TBO or cycle length for the ELS should be calculated.

Concept Introduction: TBO orcyclelength for ELS is division of ELS by demand

D

Summary Introduction

Interpretation: The production time per lot should be calculated.

Concept Introduction:Dividing lot size with production rate is production rate

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Sharpe Cutter is a small company that produces specialty knives for paper cutting machinery. The annual demand for a particular type of knife is 100,000 units. The demand is uniform over the 250 working days in a year. Sharpe Cutter produces this type of knife in lots and, on average, can produce 450 knives a day. The cost to set up a production lot is $300,and the annual holding cost is $1.20 per knife.a. Determine the economic production lot size (ELS).b. Determine the total annual setup and inventory holding cost for this item.c. Determine the TBO, or cycle length, for the ELS.d. Determine the production time per lot.
The annual demand for the Super Thrive brand plant food manufactured by Cumberbatch and Dunst Indoor Plants Company is 120,000 pounds. The annual holding cost (also known as carrying charge) is $0.05 per pound, and Operations Manager Kirsten Benedict has calculated the cost of setting up machinery for making the plant food to be $20.   1) What is the annual holding (carrying) cost for the EOQ that you calculated?   2) What is the annual setup cost for the EOQ that you calculated?   3) Compare the total cost of inventory management (holding + setup cost) for the two quantities (5,000 and the EOQ you calculated) and comment on the difference. Based on your knowledge of the idea behind EOQ, what explains the differences (in words – no need to reconcile the exact differences quantitatively). Write three to five sentences in response to this question.
Arthur Meiners is the production manager of​ Wheel-Rite, a small producer of metal parts.​ Wheel-Rite supplies​ Cal-Tex, a larger assembly​ company, with 11,300wheel bearings each year. This order has been stable for some time. Setup cost for​Wheel-Rite is $41​, and holding cost is $0.60 per wheel bearing per year.​ Wheel-Rite can produce 490 wheel bearings per day.​ Cal Tex is a​ just-in-time manufacturer and requires that 52 bearings be shipped to it each business day. ​a) What is the optimum production​ quantity? units ​(round your response to the nearest whole​ number). ​b) What is the maximum number of wheel bearings that will be in inventory at​ Wheel-Rite? units ​(round your response to the nearest whole​ number). ​c) How many production runs of wheel bearings will​ Wheel-Rite have in a​ year? runs ​(round your response to two decimal​ places). ​d) What is the total setup plus holding cost for​ Wheel-Rite? ​$ (round your response to two decimal​ places).
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