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 4P
One-Eyed Toad Pottery makes custom planters for up-scale clients. The average demand for planters is 20 per week. One-Eyed Toad’s production facility has the capacity to make 25 planters per week. Setup cost is $1,500. The value of finished goods inventory is $250 per planter. The annual per-unit inventory holding cost is 35 percent of the item’s value.
- What is the economic production lot size (ELS)?
- What is the average time between orders (TBO)?
- What is the total of the annual holding cost all and setup cost?
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Joe Henry's machine shop uses 2,450 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:
Annual demand
2,450
Holding cost per bracket per year
$1.65
Order cost per order
$18.50
Lead time
2 days
Working days per year
250
a) What is the EOQ? __units (round your response to two decimal places).
b) What is the average inventory if the EOQ is used?__ units (round your response to two decimal places).
What would be the annual inventory holding cost? $__ (round your response to two decimal places).
c) Given the EOQ, how many orders will be made annually?__orders (round your response to two decimal places).
What would be the annual order cost? $__ (round your response to two decimal places).
d) Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? __ $ (round your response to two decimal places).
d)…
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One-Eyed Toad Pottery makes custom planters for up-scale clients. The average demand for planters is 20 per week. One-Eyed Toad’s production facility has the capacity to make 25 planters per week. Setup cost is $1500. The value of finished goods inventory is $250 per planter. The annual per-unit inventory holding cost is 35 percent of the item’s value.a. What is the economic production lot size (ELS)?b. What is the average time between orders (TBO)?c. What is the total of the annual holding cost and setupcost?
Chapter C Solutions
Operations Management: Processes and Supply Chains (11th Edition)
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