Dennis Odle is the production vice president of Century Electrics Company, a very large manufacturer of printers for computer systems. Each printer uses a fractional horsepower electric motor drive mechanism. Dennis has estimated that the cost of being out of stock for this particular motor is P1,300 for each unit Century is short while the carrying cost for each stock is P650. Using an EOQ model, Dennis has already calculated that the economic order quantity of this motor is 7,200 with an average usage of 60 motors a day. The normal lead time is 10 days. a.How many alternatives for the number of the safety stock do we have? for continuous question:If 0 being the first alternative of the Safety Stock and the highest alternative being the last... b.What is the total annual stockout cost of the first alternative? c.What is the total annual safety stock cost of the last alternative? d.What is the ROP (Lead time demand + Safety stock)?
Dennis Odle is the production vice president of Century Electrics Company, a very large manufacturer of printers for computer systems. Each printer uses a fractional horsepower electric motor drive mechanism. Dennis has estimated that the cost of being out of stock for this particular motor is P1,300 for each unit Century is short while the carrying cost for each stock is P650. Using an EOQ model, Dennis has already calculated that the economic order quantity of this motor is 7,200 with an average usage of 60 motors a day. The normal lead time is 10 days. a.How many alternatives for the number of the safety stock do we have? for continuous question:If 0 being the first alternative of the Safety Stock and the highest alternative being the last... b.What is the total annual stockout cost of the first alternative? c.What is the total annual safety stock cost of the last alternative? d.What is the ROP (Lead time demand + Safety stock)?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Dennis Odle is the production vice president of Century Electrics Company, a very large manufacturer of printers for computer systems. Each printer uses a fractional horsepower electric motor drive mechanism. Dennis has estimated that the cost of being out of stock for this particular motor is P1,300 for each unit Century is short while the carrying cost for each stock is P650.
Using an EOQ model, Dennis has already calculated that the economic order quantity of this motor is 7,200 with an average usage of 60 motors a day. The normal lead time is 10 days.
a.How many alternatives for the number of the safety stock do we have?
for continuous question:If 0 being the first alternative of the Safety Stock and the highest alternative being the last...
b.What is the total annual stockout cost of the first alternative?
c.What is the total annual safety stock cost of the last alternative?
d.What is the ROP (Lead time demand + Safety stock)?
Transcribed Image Text:The table shows the record of the
past demand after reorder point.
Demand after reorder point
Frequency (days)
500
10
580
11
600
52
680
7
750
2.
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