Victor Pimentel uses 1,500 units per year of a certain subassemblythat has an annual holding cost of$45 per unit. Each orderplaced costs Victor $ 150. He operates 300 days per year and hasfound that an order must be placed with his supplier 6 working daysbefore he can expect to receive that order. For this subassembly, find:a) Economic order qua ntity.b) Annual holding cost.c) Annual ordering cost.d) Reorder point.

Victor Pimentel uses 1,500 units per year of a certain subassemblythat has an annual holding cost of$45 per unit. Each orderplaced costs Victor $ 150. He operates 300 days per year and hasfound that an order must be placed with his supplier 6 working daysbefore he can expect to receive that order. For this subassembly, find:a) Economic order qua ntity.b) Annual holding cost.c) Annual ordering cost.d) Reorder point.

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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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
2. (SCM) Paris bakery requires, on average, 1,800 tons of flour each week, with a standard deviation of 500 tons. The lead time to receive its orders is 3 weeks. The holding cost for one ton of flour for one week is $8. It operates with a 97.98% in-stock probability. What would be its average holding cost per ton? (
4. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per com- ponent, and annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: a. What is the EOQ for this component? b. What is the reorder point? C. What is the cycle time? d. What are the total annual holding and ordering costs associated with your recom- mended EOQ? 5. Suppose that Westside's management in Problem 4 likes the operational efficiency of or- dering once each month and in quantities of 1000 units. How much more expensive would this policy be than your EOQ recommendation? Would you recommend in favor of the…
Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Buckley’s current inventory policy? ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
Metal Gear solid Company needs 2679 metal desks per year. Fixed delivery charges and costs of receiving is about $4000 per shipment. Every desk costs $800. The firm uses a 18.25% interest rate. a. Find the annual demand. 1 b. Find the total holding cost c. Find the EOQ. с.
36. The president of Value Filters became very enthusiastic about using EOQS to plan the sizes of her production runs, and instituted lot sizing based on EOQ values before she could properly estimate costs. For one particular filter line, which had an annual de- mand of 1,800 units per year and which was valued at $2.40 per unit, she assumed a holding cost based on a 30 percent annual interest rate and a setup cost of $100. Some time later, after the cost accounting department had time to perform an analysis, it found that the appropriate value of the interest rate was closer to 20 percent and the setup cost was about $40. What was the additional average annual cost of holding and setup incurred from the use of the wrong costs?
Westside Auto purchases a component used in the manufacturing of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1,000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Eastside has 250 working days per year and a lead time of 10 days. a) What is the EOQ for this component? b) What is the cycle time? c)
Anvils Works’ requires, on average, 2800 tons of aluminum each week, with a standarddeviation of 1000 tons. The lead time to receive its orders is 10 weeks. The holdingcost for one ton of aluminum for one week is $11. It operates with a 0.98 in-stockprobability.a. On average, how many tons does it have on order?b. On average, how many tons does it have on hand?c. If its average inventory was 5000 tons, what would be its average holding cost perweek?d. If its average inventory was 10,000 tons, what would be its average holding cost perton of aluminum?e. Suppose its on-hand inventory is 4975 tons, on average. What in-stock probabilitydoes it offer to its customers?
Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs thebusiness $75 to place a single order. Currently the business places 12 orders each year.i) What is the total stock administrative cost of Buckley’s current inventory policy?ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
1)..An electrical parts manufacturer purchases circuit board for manufacturing electrical board at the rate of OMR 20 per piece from a vendar . The requirements of these parts are 1000 per quarterly yearly , if the cost per placement of an order is OMR 10 and inventory carrying charges 10 percent of unit cost yearly . Calculate : a . The Economic Order Quantity ( EOQ ) b . Total Cost
)Haulsee Inc. builds 800,000 golf carts a year and purchases the electronic motors for these carts for $370 each. Ordering costs are $540, and Haulsee's inventory carrying costs average 14% of the inventory value. What is the EOQ for Haulsee? d) Alpha Products maintains a capital structure of 40% debt and 60% common equity. To finance its capital budget for next year, the firm will sell $50 million of 11% debentures at par and finance the balance of its $125 million capital budget with retained earnings. Next year Alpha expects net income to grow 7% to $140
The president of Value Filters became very enthusiastic about using EOQs to plan the sizes of her production runs, and instituted lot sizing based on EOQ values before she could properly estimate costs. For one particular filter line, which had an annual demand of 1,800 units per year and which was valued at $2.40 per unit, she assumed a holding cost based on a 30 percent annual interest rate and a setup cost of $100. Some time later, after the cost accounting department had time to perform an analysis, it found that the appropriate value of the interest rate was closer to 20 percent and the setup cost was about $40. What was the additional average annual cost of holding and setup incurred from the use of the wrong costs?