EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 11, Problem 8PA
Summary Introduction
Interpretation:The EOQ, re-order point and total annual cost needs to be determined using given information.
Concept Introduction: The economic order quantity approach aims to reduce the costs associated with holding, inventory and ordering.
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Piping Manufacturing assembles television sets. The company purchases 3,600 television kits per year, at a cost of $65 per unit. The ordering cost is $31 and annual inventory costs represent 20% of the purchasing cost.
What is the Economic Order Quantity?
What is the total annual cost?
Hold-it Inc. produces reusable shopping bags. Demand is 20,000 bags per day, 5 days per week, 50 weeks per year. Production is 50,000 per day. The setup cost is $200 and the annual holding cost rate is $.55 per bag.
Calculate the EPQ, the total cost, the cycle length and optimal production run length.
Explain the relationship between the annual ordering cost and the ordering size.
Why is there a need to compute for the Economic order quantity?
Demand for a popular athletic shoe is nearly constant at 1600 pairs per week for a regional division of a national retailer. The cost per pair is $64. It costs $75 to place an order, and annual holding costs are charged at 25% of the cost per unit. The lead time is 3 weeks. One year has 52 weeks.a. What is the Economic Order Quantity?b. What is the reorder point?c. What is the cycle time?d. What is the total annual cost?
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