Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 p order. The annual carrying cost is $6.50 per motor. It currently takes 2 weeks to supply an order to the assembly plant. Read the requirements. Requirement 1. What is the optimal number of motors that Phillips's managers should order according to the EOQ model? Begin by selecting the formula used to calculate EOQ. (D = Demand in unit EOQ= 2DP The optimal number of motors per order is G motors. Requirements X - 1. What is the optimal number of motors that Phillips' managers should order according to the EOQ model? 2. At what point should managers reorder the motors, assuming that both demand and purchase-order lead time are known with certainty? 3. Now assume that demand can vary during the 2-week purchase-order lead time. The following table shows the probability distribution of various demand levels: Total Demand for Motors for 2 Weeks Probability of Demand (sums to 1) 0.05 0.20 0.50 0.20 0.05 1,600 1,800 2,000 2,200 2,400 If Phillips runs out of stock, it would have to rush order the motors at an additional cost of $5 per motor. How much safety stock should the assembly plant hold? How will this affect the reorder point and reorder quantity? quantity)
Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 p order. The annual carrying cost is $6.50 per motor. It currently takes 2 weeks to supply an order to the assembly plant. Read the requirements. Requirement 1. What is the optimal number of motors that Phillips's managers should order according to the EOQ model? Begin by selecting the formula used to calculate EOQ. (D = Demand in unit EOQ= 2DP The optimal number of motors per order is G motors. Requirements X - 1. What is the optimal number of motors that Phillips' managers should order according to the EOQ model? 2. At what point should managers reorder the motors, assuming that both demand and purchase-order lead time are known with certainty? 3. Now assume that demand can vary during the 2-week purchase-order lead time. The following table shows the probability distribution of various demand levels: Total Demand for Motors for 2 Weeks Probability of Demand (sums to 1) 0.05 0.20 0.50 0.20 0.05 1,600 1,800 2,000 2,200 2,400 If Phillips runs out of stock, it would have to rush order the motors at an additional cost of $5 per motor. How much safety stock should the assembly plant hold? How will this affect the reorder point and reorder quantity? quantity)
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $360 per
order. The annual carrying cost is $6.50 per motor. It currently takes 2 weeks to supply an order to the assembly plant.
Read the requirements.
Requirement 1. What is the optimal number of motors that Phillips's managers should order according to the EOQ model?
Begin by selecting the formula used to calculate EOQ. (D = Demand in unit
EOQ=
2DP
с
The optimal number of motors per order is
motors.
Requirements
1. What is the optimal number of motors that Phillips' managers should order
according to the EOQ model?
2. At what point should managers reorder the motors, assuming that both demand
and purchase-order lead time are known with certainty?
3. Now assume that demand can vary during the 2-week purchase-order lead time.
The following table shows the probability distribution of various demand levels:
Total Demand for Motors for 2 Weeks Probability of Demand (sums to 1)
0.05
0.20
0.50
0.20
0.05
1,600
1,800
2,000
2,200
2,400
If Phillips runs out of stock, it would have to rush order the motors at an additional
cost of $5 per motor. How much safety stock should the assembly plant hold? How
will this affect the reorder point and reorder quantity?
X
quantity)
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