• +44-190-022-0819 +44-190-022-0819
  • +1-248-268-9041 +1-248-268-9041
  • +61288800241 +61288800241

SEARCH SOLUTION

Search your solution from list of 1000+ questions

13-07-2019

Product code Management-PH478

Your answers to these case studies will be due, Saturday, 20 April 2019.

1. Westside Auto purchases a component used in the manufacture of automobile generators directly from a supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 total units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of inventory. Westside has 250 working days per year and a lead time of 5 days.  Please report out the following information:

a) (2 pts)What is the EOQ for this component?

b) (2 pts) What is the reorder point?

c) (2 pts) What is the cycle time?

d) (4 pts) What are the total annual holding and ordering costs associated with your recommended EOQ?

Now, suppose Westside Auto decides to operate with a backorder inventory policy.  Backorder costs are estimated to be $5 per unit per year. Identify the following:

                e) (2 pts) Minimum cost order quantity

                f) (2 pts) Maximum number of backorders

                g) (2 pts) Maximum inventory

                h) (2 pts) Cycle time

                i) (4 pts) Total annual cost

 

(2 pts) Which approach would you recommend to Westside Auto, using back orders or not?  Why?

2. Wilson Publishing Company produces books for the retail market. Demand for a current book is expected to occur at a constant annual rate of 7200 copies. The cost of one copy of the book is $14.50. The holding cost is based on an 18% annual rate, and production setup costs are $150 per setup. The equipment on which the book is produced has an annual production volume of 25,000 copies. Wilson has 250 working days per year, and the lead time for a production run is 15 days. Use the production lot size model to compute the following:

                a) (2 pts) Minimum cost production lot size

                b) (2 pts) Number of production runs per year

                c) (2 pts) Cycle time

                d) (2 pts) Length of a production run

                e) (2 pts) Maximum inventory

                f) (6 pts) Total annual cost

                g) (2 pts) Reorder point

Download Questions

1. Westside Auto a) What is the EOQ for this component? Annual demand is 12,000 units D=12,000 Ordering cost C = $25 Holding cost H(20% of the value of inventory)= ).20*2.5= $0.5 EOQ=?(2DC/H)=?((2*12000*25)/0.5)=1095.445=1096 units b) Reorder point Lead time L = 5 days Number of working days N= 250 ROP= RL/N=(12000*5)/250=240units c) Cycle time Cycle time T= (250)*1096/12000= 22.83 days in a cycle d) Annual Holding cost = Q/2*h=1096/2*0.25*2.5= $274 Annual ordering cost = D/Q*C= 12000/1096*25= $273.72

Related Questions in (Operations Management)

13-01-2018

Solution: The Journal of Helene Berr and Rue Ordener, Rue Labat 2 evidences that prove the difficulty and destructiveness that the people had to face in those four years. As mentioned by Berr (2009, p.23), in h ...

18-01-2018

Solution: Employee communication highlights the sharing of ideas and information. In this competitive business world, information exchange is essential among employees to develop team performance effectively. m ...

18-01-2018

Solution: As per Section 1 of the Thirteenth year plan describes about China’s two key objectives that will be accomplished if the National People’s Congress or the standing committee of this party passes t ...

18-01-2018

Solution: (Feldman 2005) reference information extraction to be one of the weightiest pre-processing method that escalates the text mining potential significantly. Pre-processing is an essential part in informa ...

18-01-2018

Solution: The pro forma income statement represents a trending statement that includes the probable net income value for the company considering the current growth and decline rates valid throughout the period ...

18-01-2018

Solution: Mode is defined as the value which occurs more frequently in the data set. The mode for non-business is 82 while for business is only 59. P value can be calculated from z table . As per z table p valu ...

18-01-2018

Solution: ABC assumes that there are different activities involved in different processes that cause costs andthe product, services, and customers are reasons for those activities. The UK customer segment is br ...

19-01-2018

Solution: Residual earnings valuation method is used to calculate the intrinsic value of the stock based on the expected residual income of the company in the coming years. The residual income is discounted bac ...