A component used in a manufacturing facility is ordered from an outside supplier. Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks is The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint: Express h as the holding cost per thousand units.) a. What ordering policy is recommended by the Silver–Meal heuristic? b. What ordering policy is recommended by the part period balancing heuristic? c. What ordering policy is recommended by the least unit cost heuristic? d. Which method resulted in the lowest-cost policy for this problem?

A component used in a manufacturing facility is ordered from an outside supplier. Because the component is used in a variety of end products, the demand is high. Estimated demand (in thousands) over the next 10 weeks is The components cost 65 cents each and the interest rate used to compute the holding cost is 0.5 percent per week. The fixed order cost is estimated to be $200. (Hint: Express h as the holding cost per thousand units.) a. What ordering policy is recommended by the Silver–Meal heuristic? b. What ordering policy is recommended by the part period balancing heuristic? c. What ordering policy is recommended by the least unit cost heuristic? d. Which method resulted in the lowest-cost policy for this problem?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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