Suyuti Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Suyuti'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 GH¢25 per order, the unit cost is GH¢2.50 per component and annual holding costs are 20 per cent of the value of the inventory. Suyuti has 250 working days per year and a lead time of five 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?

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...
icon
Related questions
Question
Suyuti Auto purchases a component
used in the manufacture of automobile
generators directly from the supplier.
Suyuti'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 GH¢25 per order, the unit cost
is GH¢2.50 per component and annual
holding costs are 20 per cent of the
value of the inventory. Suyuti has 250
working days per year and a lead time of
five 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
recommended EOQ?
10:41 AM /
Transcribed Image Text:Suyuti Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Suyuti'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 GH¢25 per order, the unit cost is GH¢2.50 per component and annual holding costs are 20 per cent of the value of the inventory. Suyuti has 250 working days per year and a lead time of five 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 recommended EOQ? 10:41 AM /
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.