MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Processes and Supply Chains
11th Edition
ISBN: 9780133885583
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
MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Processes and Supply Chains
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- Firm Tezla produces the product QuickCar. Annual demand for QuickCar is 600 units per year on a continuous basis. The product has inventory holding costs of $30 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed. Calculate the economic order quantity (EOQ). a. 77 units b. 110 units c. 60 units d. 44 unitsarrow_forwardJoe Henry's machine shop uses 2,520 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 2,520 Holding cost per bracket per year Order cost per order $1.55 $19.00 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? What would be the annual inventory holding cost? $ units (round your response to two decimal places). (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). e)What is the time between orders? days (round your response to two…arrow_forwardJordin Henry's machine shop uses 2,500 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 Holding cost per bracket per year Order cost per order Lead time Working days per year a) What is the EOQ? units (round your response to two decimal places). b)What is the average inventory if the EOQ is used? What would be the annual inventory holding cost? $ 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). 2,500 $1.25 $19.75 f) What is the reorder point (ROP)? 2 days 250 units (round your response to two decimal places). (round your response to two decimal places). d) Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? $ response to two decimal places). e) What is the time between orders? days…arrow_forward
- 10.15 An item has a weekly demand of 120 units throughout the year. The item has a unit value of $24 and the company uses 16% of the item value for the annual inventory cost. When ordered, the setup cost to produce an order is $600, and the production process is able to produce 300 per week and deliver them weekly as produced. What is the economic-order quantity?arrow_forwardWood County Hospital consumes 1,000 boxes of bandagesper week. The price of bandages is $35 per box, and thehospital operates 52 weeks per year. The cost of processingan order is $15, and the cost of holding one box for a year is15 percent of the value of the material.a. The hospital orders bandages in lot sizes of 900 boxes.What extra cost does the hospital incur, which it couldsave by using the EOQ method?b. Demand is normally distributed, with a standard devia-tion of weekly demand of 100 boxes. The lead time is2 weeks. What safety stock is necessary if the hospital usesa continuous review system and a 97 percent cycle-servicelevel is desired? What should be the reorder point?c. If the hospital uses a periodic review system, with P = 2weeks, what should be the target inventory level, T?arrow_forward12.8 Madeline Thimmes's Dream Store sells water beds and assorted supplies. Her best-selling bed has an annual demand of 400 units. Ordering cost is $40; holding cost is $5 per unit per year.a) To mininize the total cost, how many units should be ordered each time an order is placed?arrow_forward
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