Economic order quantity Essays & Research Papers

Best Economic order quantity Essays

  • Manufacturing and Economic Order Quantity
    FabQual Ltd. (This case appears in the textbook on pages 463-464 of the second edition and page 464 of the third edition. I have changed the British £ sign to the U.S. $ sign on the monetary data. You can use U.S. $ for all monetary answers.) FabQual Ltd. Manufactures parts and subassemblies for a number of small-volume manufacturers of specialized construction equipment, including bulldozers, graders, and cement mixers. FabQual also manufactures and distributes spare parts. The company has...
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  • Economic Order Quantity - 9257 Words
    Chapter 8 The Economic Order-Quantity (EOQ) Model Leroy B. Schwarz Purdue University The economic order-quantity model considers the tradeoff between ordering cost and storage cost in choosing the quantity to use in replenishing item inventories. A larger order-quantity reduces ordering frequency, and, hence ordering cost/ month, but requires holding a larger average inventory, which increases storage (holding) cost/month. On the other hand, a smaller order-quantity reduces average...
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  • Economic Order Quantity - 849 Words
    The Economic Order Quantity (EOQ) is the number of units that a company should add to inventory with each order to minimize the total costs of inventory—such as holding costs, order costs, and shortage costs. The EOQ is used as part of a continuous review inventory system, in which the level of inventory is monitored at all times, and a fixed quantity is ordered each time the inventory level reaches a specific reorder point. The EOQ provides a model for calculating the appropriate reorder point...
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  • Economic Order Quantity - 2031 Words
    Contents 1. Executive Summary -03 2. Introduction -03 3. Objective of study -06 4. Research Methodology -06 5. Analysis and interpretation of data -07-13 6. Conclusion -13 7. References -15...
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  • All Economic order quantity Essays

  • Economic Order Quantity - 2415 Words
    Worked Examples for Chapter 18 Example for Section 18.3 Computronics is a manufacturer of calculators, currently producing 200 per week. One component for every calculator is a liquid crystal display (LCD), which the company purchases from Displays, Inc. (DI) for $1 per LCD. Computronics management wants to avoid any shortage of LCDs, since this would disrupt production, so DI guarantees a delivery time of 1/2 week on each order. The placement of each order is estimated to require 1 hour...
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  • Eoq, Economic Order Quantity
    EOQ INVESTIGATION. PAPER. ECONOMIC ORDER QUANTITY (EOQ) An Economic Order Quantity is the optimal number of order that minimizes total variable costs required to order and hold inventory, that is to say, that EOQ helps us to determine the appropriate amount and frequency when ordering and holding inventory. EOQ is used as part of a continuous review inventory system, in which the level of inventory is monitored at all times, and a fixed quantity is ordered each time the inventory level...
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  • Economic Order Quantity and Its Implementation on Business
    ECONOMIC ORDER QUANTITY AND IT’S IMPLMENTATION IN BUSINESS Any business man, executive, and entrepreneur should know the basic tools for a company to develop in the market, regardless how big the business is, there are many factors involve. It is very important in every business to handle well developed financial and logistics processes. In order for a company to handle a correct logistic, without matter if it is a goods or services company, it is necessary to identify many factors. Some of...
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  • Economic Order Quantity and Significant Predictor.
    1. Stock prices over a period of fifty (50) years would most likely exhibit no cyclical component. a. True b. False 2. On the plot labeled “a”, which of the following is correct? a. There is a trend present. b. There is a linear relationship. c. There is an obvious outlier. d. There is a negative relationship. 3. On the plot labeled “b”, there is an outlier present. a. True b. False 4. On the plot labeled “c”, which of the...
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  • Economic Order Quantity and Optimal Order Size
    Tutorial 9 – Inventory Model Question 1 The Metropolitan Book Company purchases papers from the Atlantic Paper Company. Metropolitan produces magazines and paperbacks that require 1,215,000 pounds of paper per year. The cost per order for the company is $1200; the cost of holding 1 pound of paper in inventory is $0.08 per year. Determine the following: a) The economic order quantity b) The minimum total annual cost c) The optimal number of orders per year d) The optimal time between...
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  • Order Size Transportation Costs And Economic Order Quantity
     Order Size, Transportation Costs, and Economic Order Quantity Jerome Benedict 604 488 9691 Prepare answers to the following questions prior to class. In class you will be given time to discuss your findings in small groups. Be prepared to present your findings either individually, or as a group, to the class. This discussion exercise is worth 2.5% of the overall mark for this module. 1. Is it reasonable to think order sizes are infinitely variable? How does this relate to LTL...
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  • Economic Order Quantity and Cycle Service Level
    OPERATIONS MANAGEMENT B3401 ASSIGNMENT # 3 (Total 100 points) Due on Nov 16 2010 (Tuesday) (Write your name, student #, section # in which you are registered) Q1. (Total 20 points) The FS factory can produce wieners at a rate of 5,000 per day. FS supplies wieners to local stores at a steady rate of 250 per day. The cost of preparing the equipment for producing wieners is $22. Annual holding costs are 15 cents per wiener. The factory operates 300 days a year. Find: 1) The optimal total...
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  • Explain the Economic Order Quantity (EOQ) from first principles
    Explain the Economic Order Quantity (EOQ) from first principles. EOQ, or Economic Order Quantity, was developed by F. W. Harris in1913, even if R. H. Wilson is recognized for his early deeply analysis of the model. Harris's original paper was disseminated; it actually was ignored for many years before its rediscovery in 1988. During this period, a lot misunderstanding developed over the origin of the EOQ model. The model is defined as the optimal quantity of orders that minimizes total...
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  • Discuss the Economic Order Quantity model (EOQ) and the Just-In-Time model (JIT), and identify the effectiveness of the two models.
    EXECUTIVE SUMMARY It is very important that successful enterprises need efficient stock control management. In reality, we usually use many stock control models such as the Economic Order Quantity model (EOQ) and Just-In-Time model (JIT). Efficiency gains in inventory management can bring significant improvement to overall company financial performance. In this report, rationale of the two models, effectiveness of the two models in practice, and use JIT system in McDonald company will be...
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  • Ch08 Sm Petty Fmpa6e
     CHAPTER 8 Current asset management SOLUTIONS TO PROBLEMS 8-2* (a) Recommendation (i) 0.105 × $800 000 × 1/12 = $7,000 < $20,000 No (ii) 0.105 × $800,000 × 2/12 = $14,000 < $20,000 No (iii) 0.105 × $800,000 ×3/12 = $21,000 > $20,000 Yes (iv) 0.105 × $800,000 × 6/12 = $42,000 > $20,000 Yes (v) 0.105 × $800,000 ×12/12 = $84,000 > $20,000 Yes (b) Let y be the break-even yield. With $800,000 to invest for two months and a two-month holding period, we...
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  • Operating Management - 2078 Words
    1. Carrying costs include the following items, except: a. labor b. record keeping c. rent *d. all the above 2. Which of the following is not a cost associated with carrying inventory? *a. price discounts b. carrying costs c. ordering costs d. shortage costs 3. The level of inventory at which a new order should be placed is known as the a. lead time b. replenishment quantity *c. reorder point d. service level 4. A restaurant currently uses 62,500 boxes of...
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  • Qat 4 - 373 Words
    Jason Walthour Student ID 305059 QAT Task 3 Order size for Company A. To find the order size for Company A you need to use the economic order quantity model. This will give the smallest total cost to the company. First you need to find the holding cost. To find the holding cost you multiply the annual holding cost rate by the unit cost of the item (Ch=IC). In this example the annual holding cost rate is 3% and the unit cost is $500 (Ch=3%X$500 or Ch=$15). Now that you have the...
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  • Eoq and Moq - 519 Words
    Q 1. EOQ and MOQ are supplier-related terms, where EOQ shows the costs a supplier has that are associated with purchasing goods and MOQ shows the amount of goods required for purchase to pass on to the supplier’s customers. EOQ - Economic Order Quantity EOQ is basically an equation used to determine inventory stock. It figures the ideal quantity to order that a particular supplier should maintain in warehouse, determined by a consistent cost for production, demand,...
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  • OMIS 2010 Practice Questions Final Exam NEW
    OMIS 2010 Examples from Final exams with solutions: 1.(20 pts) GNO is a retail phone-catalog company that specializes in outdoor clothing and equipment. A phone station at the company will be staffed with either full time operators or temporary operators 8 hours per day. Full time operators, because of their experience and training, process more and make fewer mistakes than temporary operators. However, temporary operators are cheaper because they receive a lower wage rate and they are not paid...
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  • Jawapan Past Years Opm 530
    JANUARY 2012 QUESTION 1 ‘Operation management is the set of activities that create value in the form of goods and service by transforming inputs into outputs’. Based on the statement, explain briefly the 10 Operation Management critical decisions i. Design of goods and services ii. Managing quality iii. Process and capacity design iv. Location strategy v. Layout strategy vi. Human resource and job design vii. Supply chain management viii. Inventory, material...
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  • important - 712 Words
    1 Joe's pizza parlor is attempting to minimize total inventory cost. The cost of each pizza is $1.25. The cost of capital is 18% and the physical cost of maintaining his pizza inventory is currently running at 2% of cost. Joe pays his secretary/bookkeeper $7.50 per hour. Joe's secretary can place an order in 15 minutes with materials and overhead cost of $15.00 per order. Records show, weekly pizza sales as follows: Weekly Pizza Sales Week Sales(units) 1 475 2 515 3 525 4 500 5...
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  • Ice House Toys - 2396 Words
    Ice House Toys Case Study Khalid EL JARRARI Ice House Toys Index of contents Ice House Toys presentation I- Mail-Order Operation and prospects of change I-1 Capacity constraints I-2 Extension of the warehouse capacity I-3 Other ways to overcome capacity constraints I-4 The website impact on operations II- Long-term capacity planning issues III- Alternative purchasing policy IV- Overtime payment V-...
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  • Brs Mdm3 Tif Ch12
     Managerial Decision Modeling w/ Spreadsheets, 3e (Balakrishnan/Render/Stair) Chapter 12 Inventory Control Models 12.1 Chapter Questions Use this information to answer the following questions. A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order...
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  • Sport Obermeyer - 1734 Words
    *Sport Obermeyer:* Case Analysis Pratyusha Lakshmi Puranam Executive Summary: Obermeyer offers a broad line of fashion ski apparel, including parkas, vests, ski suits, shells, ski pants, sweaters, turtlenecks, and accessories. Parkas are considered the most critical design component of a collection; the other garments were fashioned to match the parkas’ style and color. Their products were offered in five different genders: men’s, women’s, boys’, girls’, and preschoolers’. The...
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  • Shuzworld task 2 Decision Analysis Tables only
    Table A.1 Current Shipping Process Factory Capacity Warehouse Requirements Shanghai 1300 1 2500 Shuzworld H 2300 2 1500 Shuzworld F 2200 3 1800 Totals 5800 5800 Table A.2 Costs To/From Warehouse 1 Warehouse 2 Warehouse 3 Shanghai $4 $3 $3 Shuzworld H $3 $4 $2 Shuzworld F $2 $4 $6 Table A.3 - Low-Cost Method Data COSTS W1 W2 W3 Supply Shanghai 4 3 3 1300 Shuzworld H 3 4 2 2300 Shuzworld F 2 4 6 2200 Demand 2500 1500 1800 5800 \ 5800 Shipments ...
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  • Instructions to Student - 1034 Words
    nt MULTIMEDIA UNIVERSITY GROUP ASSIGNMENT BDS4614 / BDS2074 – MANAGEMENT DECISION SCIENCE INSTRUCTIONS TO STUDENT 1. This Assignment is a Group Assignment of not more than 2 students and consists of 5 pages with 5 Questions only. 2. Answer all the questions. All questions carry equal marks and the distribution of the marks for each question is given. 3. The hard copy of the answer booklet must be printed and must be submitted to your...
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  • Zhou Case - 546 Words
    BMGT524-1900-Global Operations Management 1) Develop an inventory plan to help ZBC. We will use EOQ Formula in order to derive some data for estimates. Annual demand = D = 439 Cost of Bicycle at whole sale (C) = 0.60*170 = $102 Carrying cost (H) = 12% of cost = 102 *.12 = 12.24 Ordering cost (S) = $65 per order Lead time = 4 weeks Re order point = ROP = daily demand x lead time (days) = 439/365 * 28 = 33.67 EOQ Formula Order quantity Q =...
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  • Supply Chain Management Formulas
    NEWSVENDOR MODEL Too Much/Too Little Problem Maximize Expected Profit STEP 1: overage/underage costs Co = overage cost per unit Co = Variable Cost – Salvage value Cu = underage cost per unit Cu = Price – Cost (+ Future Cost) STEP 2: Find Critical Ratio F(Q*) = Probability demand < Q. Cu /Cu+ C0 = critical ratio/srvc level STEP 3: Calculate z from table. φ(Ζ) = Critical ratio STEP 4: Calculate Q* = optimal order quantity Ζ= from above (table) μ = mean σ =...
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  • Eoq and Jit Paper - 1330 Words
    Economic Order Quantity vs. Just-in-time Inventory Models Bettina Bradshaw Susan Day Tameka S. Levy Accounting April 20, 2011 There are several models that have been developed to deal with the trade-off between ordering and carrying costs of inventory. The two that will be discussed is the Economic Order Quantity (EOQ) model and the Just-in-time (JIT) model. First, the history and definition of the theories will be discussed. Secondly, there will be a comparison of these two models...
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  • Eoq Solution - 757 Words
    Q.1a) The following graph is EOQ model with planned shortages. Let the parameters from the basic EOQ model. d = constant demand rate K = setup cost for placing one order Q = order quantity h = inventory holding cost per unit of product per unit of time p = shortage cost per unit of product per unit of time S = inventory level just after an order of size Q arrives So, Q– S = Shortage in inventory just before an order of Q units is added Production or ordering cost...
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  • Littlefield Technology - 1057 Words
    Littlefield Technologies Game 2 Strategy – Group 28 1. CUSTOMER ORDERS AND ORDERS WAITING FOR MATERIAL: When considering the demand level and changes, we would configure a time series of that data using short range forecasting. Time series are important because they are often the drivers of decision models. Trend projection and regression analysis models will be used to forecast the future demand as the growth of the demand increases at a lower level, increases to a higher level, and then...
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  • Operations Management - Assignment 3
    Operations Management Assignment 3 Q:Difference between different types of EOQ. Economic Order Quantity: The economic order quantity (EOQ) is the fixed order quantity (Q) that minimizes the total annual costs of placing orders and holding inventory (TC). This type of model is used when i) Demand is independent. ii) Compute how much to order. Economic Production Quantity: The economic production quantity (EPQ) is the production quantity (lot size) that minimizes the total...
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  • anupindi mbpf3 ch06 - 1738 Words
    Managing Business Process Flows: Ch 6 Supply Chain Management  Managing the Supply Chain    Key to matching demand with supply Managing materials waiting time Cost and Benefits of inventory  Inventory Analysis: Economies of Scale (Ch 6)   Palu Gear: Inventory management of a retailer: EOQ + ROP Levers for improvement Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall 1 Key Financial Indicators of Supply Chain Performance Return on Assets  Net Present Value  … ...
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  • Inventory Question - 1350 Words
    Interview Questions Answers - Inventory Management [12:27 PM | ] 1. What is inventory control? Answer: Inventory control is the process of reducing inventory costs while remaining responsive to customer demands. By this definition a store would want to lower its acquisition, carrying ordering and stock-out costs to their lowest possible levels. However a store would need to have enough inventories to meet any needs of its customers. 2. What does inventory affect in a store? ...
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  • solutions to homework-1 - 1845 Words
    ISyE 6201: Manufacturing Systems Instructor: Spyros Reveliotis Solutions to Homework 1 A. Chapter 2, Problem 4. (a) D = 60 units/wk × 52 wk/yr = 3120 units/yr h = ic = 0.25/yr ×$0.02 = $0.005/ yr A = $12 2AD 2 × 12 × 3120 Q∗ = = = 3869.88 ≈ 3870 h 0.005 The time between orders is given by 3870 Q∗ = = 1.24 yr = 14.88 mo T∗ = D 3120 (b) D 3120 units/yr = $12 = $9.67/yr Q 3870 units Q 3870 units Holding cost is h = × $0.005/yr = $9.675/yr. 2 2 The costs are...
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  • Case Analysis: Blanchard Importing and Distributing
    Managing Business Operations Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033) Submitted by: Tushar Kothavale (130) NMIMS, FT MBA 2009-2011 1) Correct the Economic Order Quantity (EOQ) and Reorder point (ROP) quantities for each of the five items mentioned in the case. We first predict the annual demand for the year 1972 based on trend for 4 months of 1972 based on corresponding months of 1971. Calculations for Annual demand (R): The assumption made here...
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  • Practice Questions - 1104 Words
    PRACTICE QUESTIONS FOR NEWSVENDOR MODEL 1. Burger prince buys top-grade ground beef for $3 per kg. A large sign over the entrance guarantees that the meat is fresh daily. Any leftover meat is sold to the local high school cafeteria for $2 per kg. Eight hamburgers can be prepared from each kilogram of meat. Burgers sell for $2 each. Labour, overhead, meat, buns and condiments cost $1 per burger. Demand is normally distributed with a mean of 400 kg per day and a standard deviation of 50 kg per...
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  • EOQ - 378 Words
    ECONOMIC ORDER QUANTITY (EOQ) MODEL The economic order quantity (EOQ) is the order quantity that minimizes total holding and ordering costs for the year. Even if all the assumptions don’t hold exactly, the EOQ gives us a good indication of whether or not current order quantities are reasonable. What is the EOQ Model? Cost Minimizing “Q” Assumptions: Relatively uniform & known demand rate Fixed item cost Fixed ordering and holding cost Constant lead time (Of course, these assumptions don’t...
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  • Case Analysis: Blanchard Importing and Distributing Co. Inc. (Hbs Case 9 - 673 - 033)
    Managing Business Operations Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033) Submitted by: Tushar Kothavale (130) NMIMS, FT MBA 2009-2011 1) Correct the Economic Order Quantity (EOQ) and Reorder point (ROP) quantities for each of the five items mentioned in the case. We first predict the annual demand for the year 1972 based on trend for 4 months of 1972 based on corresponding months of 1971. Calculations for Annual demand (R): The assumption...
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  • Supply Chain Management: Study Notes
    SYST 4050 Supply Chain Management – Homework 5 1. Harley Davidson has its engine plant in Milwaukee and its motorcycle assembly plant in Pennsylvania. Engines are transported between the two plants using trucks, with each trip costing $1,000. The motorcycle plant assembles and sells 3000 motorcycles a year. Each engine costs $500, and Harley incurs uses holding cost of 20 percent. a) How many engines should Harley load onto each truck (i.e. what is the optimal order quantity)? D =...
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  • OM 300 Final Exam Study Guide- Petty
    Chapter 4: Forecasting Forecasting Steps  1. Determine the use of the forecast 2. Select the item tot be forecasted 3. Determine the time horizon of the forecast 4. Select the forecasting model(s) 5. Gather the data 6. Make the forecast 7. Validate and implement results Forecasting Methods  Quantitative Methods: used when situation it “stable” and historical data exists; existing products and current technology are key; involves mathematical techniques; ex: forecasting sales of...
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  • The Eoq Inventory Formula - 2324 Words
    The EOQ Inventory Formula James M. Cargal Mathematics Department Troy University – Montgomery Campus A basic problem for businesses and manufacturers is, when ordering supplies, to determine what quantity of a given item to order. A great deal of literature has dealt with this problem (unfortunately many of the best books on the subject are out of print). Many formulas and algorithms have been created. Of these the simplest formula is the most used: The EOQ (economic order quantity) or...
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  • MgtOp 340 Final Exam Notes
    MgtOp 340 Exam 2 EOQ Suppose that JJ Inc. has a production rate of 250,000 units per year and a demand of 800 per day. JJ has a setup cost of $40, and a holding cost percentage of 25%. JJ sells their product for $50 and it costs them $30 to produce it. If JJ works for 250 days per year, what is the optimal batch size? p=(250,000/250days)=1,000 P=250,000(production rate) d=800 D=(800*250days)=200,000 S=$40 I=.25 c=$30 H=(.25*30)=7.5 Optimal batch size =>...
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  • Slayton Furniture - 258 Words
    Slayton's Furniture Store Fakta DOVETAIL BEDROOM SET ITEM NOMINAL Selling price (each) $1,000 Unit cost (each)* $600 Average annual sales 80 sets Ordering cost** $40 per order Annual carrying cost*** 30% Safety stock 2 sets Wright per set 1000 lb Lead time (average) 4 weeks *Excludes freight cost **This cost includes receiving ($20 per order) and paperwork ($20 per order) ***This cost includes the cost of capital (15%), insurance...
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  • production control - 785 Words
    1) The manager of an automobile repair shop hopes to achieve a better allocation of inventory control efforts by adopting an A-B-C approach to inventory control. a) Given monthly usages in the following table, classify the items in A, B and C categories according to dollar usage: Item Usage Unit Cost 4021 90 $1,400 9402 300 12 4066 30 700 6500 150 20 9280 10 1,020 4050 80 140 6850 2,000 10 3010 400 20 4400 5,000 5 a) In descending order: Item Usage x Cost 4021 $126,000...
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  • Newsvendor Problem - 3089 Words
    Proposal – Generalizations of Newsvendor Problem 1. Introduction: The newsvendor model has been used in operations management and applied economics for years to determine optimal ordering quantity under uncertain demand. Perishable goods such as banana and lettuce cannot be carried from one period to another. Managers have to make decision on the inventory level of perishable goods over a very limited period. For example, due to the uncertainty of the demand of the newspaper, the...
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  • Accg301 Week 5 Tutorial Answers
    Suggested answers of the tutorial questions EXERCISE 15.25 1 Safety stock: The lead time is one month, so the safety stock is equal to the difference between average monthly usage and the maximum usage in a month. Average monthly usage is 70 tonnes (840/12), and the maximum usage is 80 tonnes. Therefore, the safety stock is 10 tonnes (80 – 70). 2 Reorder point: The reorder point is 80 tonnes. This is the maximum amount of the chemical that would be used in a month, and this is...
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  • Reorder - 4466 Words
    16 Managing stock levels: materials management and inventory control Prerequisites Objectives For part of this chapter you will find it useful to have some knowledge of the normal distribution (see Chapter 8: The shape of data: probability distributions) To be able to calculate the costs associated with holding stocks To be able to calculate the order quantity that would minimize these costs To know how to decide whether it is worthwhile to buy in bulk in order to obtain a price discount...
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  • Inventory Exercises - 440 Words
    Inventory Exercises 1. At Dot Com, a large retailer of popular books, demand is constant at 32,000 books per ear. The cost of placing an order to replenish stock is $10 and the annual cost of holding is $4 per book. Stock is received five working days after an order has been placed. No backordering is allowed. Assume 300 working days a year. a. What is Dot Com’s optimal order quantity (EOQ)? b. What is the optimal number of order per year? c. What is the optimal interval (in working...
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  • SportObemeyer - 1670 Words
    Logistics and Supply Chain Management Case Submission Sport Obermeyer Assuming Obermeyer’s initial production commitment must be at least 10,000 units. Problem Statement1: using the sample data given in Table 2.20 of the case in the text make a recommendation of how many units of each style Obermeyer should order during the initial phase of production. Assume that all 10 styles in the sample problem are made in Hong Kong. c_u 24% c-o 8% Style...
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  • Upd Case - 286 Words
    Case: UPD Manufacturing Given, Demand, d = 6 Ordering Interval, OI = 89 Ordering cost, S = $32 Holding Cost/Carrying Cost, H = $.08 As there is no demand variability, the formula for quantity is: Q = d (LT + OI) – A (as there is no safety stock) ------- A - ROP (Reorder point) We know, A = d * LT, so the fixed order interval order quantity equation Q becomes Q = (d * LT) + (d...
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  • The 73 - 1967 Words
    Operations Management I 73-331 Winter 2001 Faculty of Business Administration University of Windsor Final Exam Tuesday, April 17, Noon – 3:00 p.m. Faculty of Education Neal Building Room 1101 Instructor: Mohammed Fazle Baki Aids Permitted: Calculator, straightedge, and a both-sided formula sheet. Time available: 3 hours Instructions: This exam has 11 pages including this cover page and 1 page of Table Please be sure to put your name and student ID number on each page. Show your...
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  • Answerset 5std - 1566 Words
     MGMT 405 Operations and Production Management Answer set 5 (Reference chapters 12– William J. Stevenson-2007, ninth edition) Problems 1. The manager of an automobile repair shop hopes to achieve a better allocation of inventory control efforts by adopting an ABC approach to inventory control. Using the following monthly usage and classify the items in A, B, and C categories according to dollar usage: Item Usage Unit Cost 4021 50 $ 1400 9402 300 12 4066 40 700 6500 150 20 9280 10 1020 4050 80...
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  • Managing Flow Variability - 4864 Words
    Chapter 7: managing flow variability: safety inventory 7.1 Objective In the previous chapter on inventory, we focused on economies of scale as the major driver for inventory. The purpose of this chapter is to introduce the notion of safety inventory as a buffer against stochastic variability in supply / demand and discuss various levers for reducing it. The chapter is covered over two classes each of duration 100 minutes. In the first class, we first motivate the need for forecasting as a way...
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  • Ludo Case - 567 Words
    1. What is the optimal order quantity that Michelle Peach should use for Dado and for Wedo? What are the resulting expected profits? The optimal order quantities that Michelle Peach should use for Dado and for Wedo are 1,270 and 730. The gross margins and expected profits would be: The annual net income has considered that all the other costs as constant. The advertising revenues are the same (fixed amount, not per unit ad amount). 2. Michelle finds out that Bobby Peru, a local...
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  • supply cahin - 315 Words
    2. Using the spreadsheet calculate a quantity discount analysis for a quote using range quantities. 3. What quantity should Minnie order if she wants to receive the lowest incremental costs between quantities? Quantity Range Quoted Price Quantity Range Incremental Cost 1-999 $4.03 First 999 units $4.03 1000-1999 $4.00 next 999 units $3.97 2000-2999 $3.97 next 999 units $3.91 At least 3000 $3.94 $- Minnie should go with the range of ordering between 2000-2999...
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  • Operation Magement - 676 Words
    PROBLEMS 1. Lead time for one of Montegut Manufacturing's fastest moving products is 4 days. Demand during this period averages 100 units per day. What would be an appropriate re-order point? Re-order point = demand during lead time = 100 units/day * 4 days = 400 units. 2. Montegut Manufacturing produces a product for which the annual demand is 10,000 units. Production averages 100 per day, while demand is 40 per day. Holding costs are $1.00 per unit per year; set-up costs...
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  • Cost Accounting - 11078 Words
    Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 20 Inventory Management, Just-in-Time, and Simplified Costing Methods Objective 20.1 1) Which of the following industries would have the highest cost of goods sold percentage relative to sales? A) computer manufacturers B) retail organizations C) drug manufacturers D) The percentage will usually depend on the success of a particular company. Answer: B Diff: 2 Terms: inventory management Objective: 1 AACSB: Reflective...
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  • Starbucks Weakness - 945 Words
    Individual coursework Starbucks, as we all know, are one of the globally popular companies, but like everything else, it has its own weaknesses. Here I will suggest some solutions to help solve the problems faced in their inventory management processes. Starbucks follows the EOQ model, which involves heavy calculations and predictions. Without the formulas and some basic information about the demands from customers, the cost of placing orders, and other variables, the calculation of the EOQ...
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  • Inventory Management - 38775 Words
    19 Inventory Theory “Sorry, we’re out of that item.” How often have you heard that during shopping trips? In many of these cases, what you have encountered are stores that aren’t doing a very good job of managing their inventories (stocks of goods being held for future use or sale). They aren’t placing orders to replenish inventories soon enough to avoid shortages. These stores could benefit from the kinds of techniques of scientific inventory management that are described in this...
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  • Hello - 19760 Words
    C H A P T E R 12 INVENTORY CONTROL MODELS LEARNING OBJECTIVES After completing this chapter, students will be able to: 1. Understand the importance of inventory control. 2. Use inventory control models to determine how much to order or produce and when to order or produce. 3. Understand inventory models that allow quantity discounts. 4. Understand the use of safety stock with known and unknown stockout costs. 5. Understand the importance of ABC inventory analysis. 6. Use Excel to...
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  • REVIEW PROBLEMS - 729 Words
    COMM 225: POM REVIEW PROBLEMS – TUTORIAL QUESTIONS Week Q1 (Ref: Q. 9-23, p413 of (Operation management: creating value along the Supply Chain)): The following table provides the information necessary to construct a project network and project crash data: Activity a b c d e f g h Predecessor a a b b c d, e Normal Times (Weeks) 16 14 8 5 4 6 10 15 Crash Times (Weeks) 8 9 6 4 2 4 7 10 Normal Costs Crash Costs $2000 $1000 $500 $600 $1500 $800 $3000 $5000 $4400 $1800 $700 $1300 $3000 $1600...
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  • Decision Analysis Task 2
    interoffice memorandum to: shanghai management team from: cassandra r gatlin subject: task 2 date: A. Upon reviewing your transportation issues, currently, the optimal transportations cost are $13,600 (as seen below). I recommend using the transportation modeling to find the distribution pattern that will meet the availability and the demand with the least amount of shipping costs. Using transportation model we find that the best and optimal warehouse solution based on the information...
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  • Case Blanchard - 2086 Words
    Introduction In the course of Operations Management was given to us a Harvard Business case study, “Blanchard Importing and Distributing Co., Inc”. The company is a liquor distributer and bottler which, is struggling with inventory management problems. The aim of our work is to help the trainee, Hank Hatch, analyzing the company’s scheduling system and present recommendations with the purpose of solving problems intrinsically related with Inventory management. Firstly, we are going to...
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  • Chapter 13 Exercise Answers
    Chapter 13: Determining Optimal Level of Product Availability Exercise Solutions 1. 0.2941 Optimal lot-size == NORMINV(0.2941,100,40) = 78.34 Given that p = $200, s = $30, c = $150: Expected profits = (p – s) NORMDIST((O – )/, 0, 1, 1) – (p – s) NORMDIST((O – )/, 0, 1, 0) – O (c – s) NORMDIST(O, , , 1) + O (p – c) [1 – NORMDIST(O, , , 1)] = $2,657 Expected overstock = (O – )NORMDIST((O – )/, 0, 1, 1) +  NORMDIST((O – )/, 0, 1, 0) = 7.41 Expected understock = ( – O)[1...
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  • Eoq, Ppd, L4L, Poq
    Lot Sizing in MRP • • • • • The net requirements data is subjected lot sizing Lot sizes developed can satisfy the net requirements for one or more weeks The basic trade-off involves the elimination of one or more setups at the expense of carrying inventory longer Lot sizing problem is basically one of converting requirements into a series of replenishment orders Lot sizing problem generally considered in a local level; that is, only in terms of the one part and not its components...
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  • Blanchard Imports - 348 Words
    9-673-033 Blanchard Importing and Distribution Co., Inc. HBSP 12pp. Teaching Note AvailableAnnotation - Illustration of the two main types of errors resulting from use of the economic order quantity (EOQ) as a tool in productionscheduling. Designed to permit class discussion to begin with a consideration of one common type of mistake, errors in calculation of the EOQ volume resulting from use of incorrect data for the input parameters of the formula. The analysis can then shift to a more general...
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  • Ise 513 Homework2 - 549 Words
    1) a. When the holding cost is assessed on a period by period basis, the holding cost would be the function of the maximum quantity hold during a period, especially when the carrying cost increase significantly along with the quantity, such as the insurance cost. Also, there are some products take up great space such as automobiles, ships and airplanes, each pieces need a certain amount of space, which makes the cost higher along with the increase of product quantity. b. Since the holding...
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  • Reebok Memo - 319 Words
    MEMO To:Tony Reebok; NFL Jersey Inventory Manager From:Reebok; Inventory Planning Assistant Date:October 9, 2014 Re:Reebok’s NFL Jersey Inventory Solution The purpose of this memo is to address the uncertainty associated with the demand for NFL replica jerseys. Because of uncontrollable factors (unpredictable popularity and success of both teams and specific players), demand fluctuates and is variable. In order for Reebok to have successful and efficient inventory planning, Reebok...
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  • Purchasing - 3634 Words
    P & G To: Purchasing strategy of P & G From: Junior Consultant, Liu Zuo Jun Subject: Purchasing 2 of 2 Date: 21 Jun 2012 Content 1. Introduction----------------------------------------------------------3 2. Negotiation-----------------------------------------------------------3 3. Suitable...
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  • ADM3301 Final Exam Rim Jaber
     Final Exam ADM 3301 A and B: PRODUCTION AND OPERATIONS MANAGEMENT Summer 2006 Professor: Rim Jaber Time: Three (3) hours Student Name: Student Number: Instructions: 1- Write down the exam copy number (that exists at the top right corner of this page) on the identification white card next to your name. 2- Answer all questions on your examination copy. Use opposite side if necessary. Answers or calculations written on the sheet of notes or on the statistical tables...
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  • Formulation in Identifying Cost of Capital
    LEAD QUESTIONS FOR J&G DISTRIBUTORS (Note: Discussion should not be restricted to these questions) Day 1 1. Identify the cost of capital and estimate the cost of placing an order. Assume that the annual inventory cost of a unit is given by, CH = iCI, where i is the cost of capital and CI, the unit cost of the item. 2. Consider the connector data and the all unit price structure described in Table 1. For each price level ($5.00, $4.75, etc.) determine the EOQ, and the corresponding total...
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  • Special Topics in Supply Chain
    Inventory: The Basics Inventor IE 5107 Material Flow Systems Dr. Boray Huang Industrial & Systems Engineering National University of Singapore Standardization Standardization  When to standardize? When to customize?  The advantages of standardization: Product Life Cycle Matching Matching demand with supplies Unit Cost Unit Price Sales Revenue Profit Sale Amount Production Cost Production Amount Types Types of Inventory  Raw material...
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  • Martin-Pullin Case Study
    Module 4 – Chapter 6 Case Study: Martin-Pullin Bicycle Corporation Martin-Pullin Bicycle Corp. (MPBC), located in Dallas, is a wholesale distributor of bicycles and bicycle parts. Formed in 1981 by cousins Ray Martin and Jim Pullin, the firm's primary retail outlets are located within a 400-mile radius of the distribution center. These retail outlets receive the order from Martin-Pullin within two days after notifying the distribution center, provided that the stock is available. However,...
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  • Operational Management Inventory Management
    INVENTORY MANAGEMENT Course Instructor: Dr. Swati Singh Course: MBA- II Amity Business School Raw material  In-Process  Finished Goods  Components & spare Parts  Inventory Costs  Purchase Cost  Ordering Costs  Carrying / Holding Costs  Shortage Costs   Procurement / Ordering costs Holding costs ◦ Maintenance and Handling ◦ Taxes ◦ Obsolescence ◦ Lost sales (Customer goodwill) ◦ Backorders ◦ Administrative, inspection, transportation etc.  Stock-outs...
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  • BADM 375 Final Cheat Sheet
    Kavin Chinnasamy BADM 375 Cheat Sheet Queues form due to variability in arrival times, service times & service availability. Impact of variability increases as utilization increases! (throughput goes up or capacity goes down). Little’s Law: I = R x T (congestion = arrival rate x delay). Little’s Law is I = R*T (where I = avg inventory, r = throughput rate, t = avg flowtime). Delay explodes as the arrival rate approaches the system capacity: Delay ≈ 1/(capacity–arrival rate). The...
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  • Supply Chain - 5375 Words
    Channel coordination through a revenue sharing contract in a two-period newsboy problem Cao To Linh and Yushin Hong Department of Industrial and Management Engineering POSTECH, Korea Abstract This paper studies channel coordination through revenue sharing contract between a single retailer and a single wholesaler in a two-period newsboy problem. Two models are discussed, a single-buying-opportunity model and a two-buying-opportunity model. We discuss how the revenue sharing...
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  • Case Study: UPD Manufacturing
    Case: UPD Manufacturing Given, Demand, d = 6 Ordering Interval, OI = 89 Ordering cost, S = $32 Holding Cost/Carrying Cost, H = $.08 As there is no demand variability, the formula for quantity is: Q = d (LT + OI) – A (as there is no safety stock) ------- A - ROP (Reorder point) We know, A = d * LT, so the fixed order interval order quantity equation Q becomes Q = (d * LT) + (d * OI) – (d * LT) * Q = d * OI = (6) (89) = 534 units Therefore, ordering at...
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  • homework - 514 Words
    ISOM 4770 Supply Chain Management Individual Homework Due 6 March, 2014 1. In the EOQ model, when demand doubles, there will be a higher cycle inventory level and therefore each unit of inventory will stay in the system for a longer time before it is sold. Indicate whether the statement is true or false and justify your answers. (1 point) 2. Yankee Company Ltd. is in the business of making and marketing premium apparel to the United States. One popular item sold each winter is a man’s...
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  • Moq Case to Improve Efficiency
    Improving Store and DC Productivity through Minimum Order Quantity Analysis Lean Six Sigma in Retail & Distribution Mitch Millstein, CFPIM, C.P.M., CQM, CQE Supply Velocity, Inc. mitch@supplyvelocity.com (314) 406-4962 November 2009 info@supplyvelocity.com Copyright: Supply Velocity, Inc. 1 Background A Value Stream Assessment (See White Paper: Finding Productivity Improvements from Field to Table) at this Grocery Retailer & Distributor identified poor productivity in its distribution...
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  • Supply Chain Coordination by Contracts
     The headlines are for the sake of classification clarity. Supply Chain Coordination Supply chain coordination issues have been of great interest to researchers for many years especially since 1990s there has been a surge in research in these topics (Burgess et al. 2006). Different perspectives has been proposed on SCC such as “the order, forecasting, procurement, and information sharing procedures among the members of the supply chain” (Therese M. Flaherty, 1996) and “SCC is concerned...
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  • Sport Obermeyer Handout - 1758 Words
    Sport Obermeyer 1 Sport Obermeyer’s Time Line and “Speculative” versus “Reactive” Production "NOW" Initial Forecast 9 months Feb … Oct 1992 … 1992 Design of 1993-94 Line. Las Vegas Revised Forecast 5 months Nov … Mar 1992 … 1993 5 months April … Aug 1993 … 1993 "Speculative" Production "Reactive" Production of 1993-94 Line of 1993-94 Line In Feb 1993, start design of 1994-95 line. “Speculative” Production 27 Months Sept 1993 Oct 1993 Nov 1993 8 months Dec Jan 1993 1994 Selling...
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  • Case 9.2 Baseball Card Emporium
    Case 9.2 Baseball Card Emporium Baseball Card Emporium (BBE) of Lewistown, Pennsylvania, is a distributor of baseball cards to sports card retailers. Its market area encompasses most of Pennsylvania, eastern Ohio, and New Jersey. The cards are printed in Neenah, Wisconsin, and currently shipped to Lewistown via motor carrier transportation. Kenny Craig, vice president of logistics, has asked his staff to evaluate using air carrier service to ship the cards. Nick Gingher, director of...
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  • The Importance of Inventory Control - 1587 Words
    Inventory is defined as any stored resource that is used to satisfy a current or future need (Render, Stair & Hanna, 2012). Many things come to make up inventory a few examples of what make up inventory are finished goods, raw materials, and work-in-progress. When it comes to a company’s most important and often times most expensive assets you discover inventory makes up as much as 50% of a company’s total invested capital (Render, Stair & Hanna, 2012). This paper will take a look at the...
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  • Inventory Management Exam Paper
    3 2>^ CS/APR 2006/MAT585 CONFIDENTIAL UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE INVENTORY CONTROL AND QUEUING THEORY COURSE CODE MAT585 EXAMINATION APRIL 2006 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of two (2) parts: PART A (5 Questions) PART B (5 Questions) 2. Answer ALL questions. 3. Candidates are not allowed to bring any material other than those allowed by the invigilator into the examination room....
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  • Barilla Case Study - 3429 Words
    Barilla SpA * The spaghetti incident - Maastricht University School of Business and Economics International Executive Master of Finance and Control 20 April 2012 Course – Logistics Prof. Dr. Allard van Riel Pauline Henselmans Jetse van de Kamp Ze Zhu Thiago Barros de Oliveira Rene Lorrier Contents 1. Reasons for the increase in variability in demand in Barilla’s supply chain 3 1.1 Distributed inventories, local optimization 3 1.2 Lack of inventory information...
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  • Operations Management Exam Revision
    Department of Decision Sciences San Francisco State University FINAL EXAM QUESTIONS The sample problems below are organized by topic. Where possible, answers are given. Disclaimers: • These questions are questions that have appeared on previous years’ (final) examinations. They are for practice only. There is no guarantee that the questions on your finals will be the same, or that different professors will give the same types of questions. • Not all 412/786 sections cover the same...
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  • Assignment 1 - 2619 Words
    KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY, KUMASI. COMMONWEALTH EXECUTIVE MASTERS IN BUSINESS / PUBLIC ADMINISTRATION CENTRE: TAKORADI CEMBA 557: PRODUCTION AND OPERATIONS MANAGEMENT SOLUTION Question 1 A. Quality in business has a pragmatic interpretation as the non-inferiority or superiority of something; it is also defined as fitness for purpose. Quality is a perceptual, conditional, and somewhat subjective attribute and may be understood differently by different...
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  • study guide - 1433 Words
    1. Management of Working Capital: Indicate whether each of the following statements is true or false. Explain your answer. 1. With a current ratio of "2.5:1", a company can already be certain of being able to pay its bills on time. TRUE - Current ratio is the ratio of current assets of a business to its current liabilities. Current ratio is calculated using the following formula: Current Ratio =Current Assets / Current Liabilities . To illustrate : CR = 2.5/1= 2.5 Current ratio matches...
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  • Ved Analysis - 1278 Words
    Assignment#2 Production and Operational Management Documentation of VED Analysis Submitted to: Mr. Chandrark Submitted by: Garima Sachan Jigisha Tiwary Kenneth Kikan Nitesh Kumar Pal Pallavi Department of Fashion Technology National Institute Of Fashion Technology, Kangra 22nd June’2011 Inventory Control The term inventory means the value or amount of materials or resource on hand. It includes raw material, work-in-process, finished goods & stores & spares....
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  • basic supply chain practice questions
     Basics Exam 1. 1. Which of the following strategies produces the longest lead-time? a. Make to order b. Engineer to order c. Make to stock d. Assemble to order 2. Which of the following statements s true? a. A product layout creates longer lead-time than a process layout. b. There is less WIP inventory in a product layout. c. Overhead costs are higher n a product layout. d. Capital equipment costs are typically higher in a process layout. 3. The objective of maximising...
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  • Case Study - 854 Words
    EXECUTIVE SUMMARY Confettti Shoes located at Greenbelt Square , Makati , Metro Manila has brought to Mrs. Bello an instant success since it was opened in the year 1983.It wasoperated by Mrs.Bello and her employees ( salesgirl) which composed of cashier and a storemanager that is paid of fixed month salary, four regular employees paid a daily wage and four students trainees that are paid less than the minimum wage requirement with a maximum six-month contract. Because of this she op0ened...
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  • Contrast the Significance of the Term Lead Time in the Traditional Eoq Context and in an Mrp System.
    Question 1 - Contrast the significance of the term lead time in the traditional EOQ context and in an MRP system. In the traditional context, lead time is fixed—either as a discrete time or as a probability distribution. Such lead time constancy or variation is outside of the inventory model. Lead time in an MRP system is assumed to be a variable. While specific lead times are stated for planning purposes, these times may be speeded up or delayed as conditions warrant. Indeed, it is this...
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  • Capacity Management At Littlefield Technologies 1
    Stanford University Graduate School of Business April 29, 2009 * * Managing a Short Product Life Cycle at Littlefield Labs Background In early January, Littlefield Labs (LL) opened its first and only highly automated lab to test blood samples. LL receives the samples from local hospitals and clinics and processes the samples using disposable kits. After 360 days of operation the lab will cease operations, shut down, and dispose of any remaining kit inventories. Neither capacity nor inventory...
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  • Independent and Dependent Demand - 3920 Words
    INTRODUCTION Inventory is the total amount of goods or materials contained in a store at any time. Store owners need to know the precise number of items on their shelves and storage areas in order to place orders or control losses. Factory managers need to know how many units of their products are available for customers orders. Restaurants need to order more food based on their current supplies and menu needs. All of these business rely on an inventory count to provide answers. The word...
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  • Drift Vedlikehold - 6890 Words
    Project report MOM460 Operation and maintenance management Operation and maintenance challenges facing the development of Skrugard and Havis facilities Student Fredrik Haugland Danielsen Veronica Hamarhaug Annikken Larsen Linn Underbakke Student number 204286 206810 207493 207349 Email f.hauglanddanielsen@stud.uis.no ...
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  • Sport Obermeyer Case - 1324 Words
    Sport Obermeyer case (Venugopal Vinjamuri and Kailash Kothari) In order to determine the quantity of each product that should be purchased at the outset so as to fill half of the total forecasted volume (10,000 units), we need to calculate the purchase price per product (something that isn’t provided in the case) and also the salvage price per product. Let’s start with the cost information of the Rococo Parka. The cost to produce one piece in Hong Kong is $60.08 while the cost in China is...
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  • Mgt314 - 1514 Words
    Individual Assignment Assignment # 03 Prepared for Kanchan Das, Ph.D. Course Instructor Operations Management (MGT-314) Summer-2012 Prepared by Md. Tanvir Rahman Mazumder 0930-319-030 Date of Submission: 30-07-2012 Question from chapter 12 1. a i) Annual demand= 40*260=10400 boxes Q*= (2DS/H) ^0.5= (2*10400*$60/30) ^0.5= 203.96 Ii) TC= (Q/2)*H+ (D/Q)*S= (203.96/2)*$30+ (10400/203.96)*$60...
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  • COMM 225 Review Problems W2015
    COMM 225: MIDTERM REVIEW QUESTIONS TOPIC: PROJECT MANAGEMENT Q 1.1: Kozar International, Inc. begun marketing a new instant-developing film project. The estimates of R&D activity time (weeks) for Kozar’s project are given in the table below. The project has two paths: AC-E-F and A-B-D-F. Assume the activity times are independent. a) What is the probability that the project will be completed between 35 and 45 days? b) If the time to complete the path A-B-D-F is normally distributed, what is the...
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  • Supply Chain Management - 374 Words
    1. The evalley farm produces a natural organic fertilizer, which it sells mostly to local gardeners and homeowners. The farm is open every day of the year. The annual demand for fertilizer is 220 000 pounds. The farm is able to produce 305,000 pounds annually. The cost to transport the fertilizer from the plant to the farm is $620 per load. The annual carrying cost is $0.12 per round. Determine: a. Optimal production run quantity b. Total annual inventory costs c. # of production...
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  • Narragansett Yacht Company - 1780 Words
    1. What is the economic order quantity for standard 5-inch winches if they are ordered from (a) Supplier A, and (b) Supplier B? Round your answers up to the next whole unit, because Narragansett cannot order a fraction of a winch. EOQ = square root of ( 2 x R x A) V x W R = annual demand is 1500 units A = ordering cost is $1,000 for Supplier A and $500 for Supplier B V = cost per unit is $300 W = carrying cost percentage is 23%...
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