• The batteries cost R400 each. • Sales volumes are constant at 600 batteries per month. • The lead time from order to delivery is 14 days. • It costs R360 for every order to be processed. It is calculated that it costs R5 to store a battery per month. 4) Calculate the optimal total costs.

• The batteries cost R400 each. • Sales volumes are constant at 600 batteries per month. • The lead time from order to delivery is 14 days. • It costs R360 for every order to be processed. It is calculated that it costs R5 to store a battery per month. 4) Calculate the optimal total costs.

Name: You were asked to assist with optimising the stock ordering and holdin
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Description: You were asked to assist with optimising the stock ordering and holding process for a company that sells car batteries. As part of the process, you need to decide the optimal order size to minimise associated costs. You are given the following inform

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The demand for a clothing brand is shown in the table below. The cost per order is about $4000. Cost of each unit of clothing = $5. Carrying cost percentage = 25% per item per 5 months. The analysis period = 5 month duration. Month Demand 1 400 2 300 3 200 4 400 5 500 a. Using this data, compute the solutions using the Lot for Lot and Periodic Order Quantity heuristics? Which of these heuristics would perform better and why? b. Assuming that the demand follows a normal distribution with the mean and variance from the data given above, determine the optimal order should be greater or lesser than the single period EOQ model.
Anglo American Platinum uses ABC analysis as an inventory categorisation method. The current inventory ordering policy is to order 10 000 units of an ‘A’-item inventory when the level falls to 4 500 units. Forecast demand to meet production requirements during the next year is 62 500 units. The cost of placing and processing an order relating to this inventory item is R250, while the cost of holding a unit in store is R50 per unit per year. You anticipate that both costs will be constant during the next year. Orders are received two weeks after being placed with the supplier. Assume a 50-week year and that demand is constant throughout the year. Using a quantitative analysis, appraise the optimality of the current ordering policy of the ‘A’-item inventory (Show all calculations).
The manager of a large electronics store wants to begin stocking a universal TV remote control device. Expected daily demand is 25 units (250 working days a year). The remote controls can be purchased from either supplier A or supplier B. Their price lists are as follows: Supplier A Supplier B Quantity Unit price Quantity Unit price 1-199 $14 1-149 $14.1 200-499 $13.8 150-349 $13.9 500+ $13.6 350+ $13.7 Ordering cost is $40 per order and annual holding cost is 25 percent of unit price. Lead time for either supplier is 10 days. Which supplier should be chosen and what kind of inventory ordering policy should be adopted?
A national chain of tyre fitters (tiger wheel and tyres) stocks a popular tyre for which the following information is available. The company operates on 50-weeks a year and normally operates from Monday to Friday only. Ordering Costs per order N$175.50 Holding Cost per unit 3 % of unit cost Cost per tyre N$1 800 Reorder quantity 5 000 Lead time 12 to 16 days Maximum usage 175 tyres per day Minimum usage 90 tyres per day Average usage 140 tyres per day Estimate the minimum level of inventory
1. The KIKO LTDA company manufactures sporting goods. Its monthly demand is 1000 units and each week it produces 923 units. The cost of each production run is $ 100 and the holding of each sporting item is 86 cents per week. The company works 250 business days in the year and the supplies it requires have a delivery time of 6 business days. With this information, it is requested to establish inventory policies that answer the following questions: a. The economic quantity to be produced. b. The reorder point c. The total annual cost of inventory d. The cycle time e. Number of runs per year f. Duration of a production run plz answer 'e' and 'f' part
1. The KIKO LTDA company manufactures sporting goods. Its monthly demand is 1000 units and each week it produces 923 units. The cost of each production run is $ 100 and the holding of each sporting item is 86 cents per week. The company works 250 business days in the year and the supplies it requires have a delivery time of 6 business days. With this information, it is requested to establish inventory policies that answer the following questions: a. The economic quantity to be produced. b. The reorder point c. The total annual cost of inventory d. The cycle time e. Number of runs per year f. Duration of a production run
Exercise 2: The demand per year (D) for product X is 12,100 units. The costs of placing an order (S) are $4.50. The unit cost (C) of the item is $25.00. The maintenance cost (H) per unit per year is 30% of the item's cost. 1. Use the economic order quantity (EOQ) model to determine: *Optimal quantity to order* The expected number of orders*Optimal time between orders*The total annual cost of maintaining that optimal amountNOTE: Show calculations of how you arrived at each amount 2. Answer, what are the potential benefits of using EOQ analysis for inventory management? How can you help businesses strike a balance between inventory holding costs and ordering costs?
A national chain of tyre fitters (tiger wheel and tyres) stocks a popular tyre for which the following information is available. The company operates on 50-weeks a year and normally operates from Monday to Friday only. Ordering Costs per order N$175.50 Holding Cost per unit 3 % of unit cost Cost per tyre N$1 800 Reorder quantity 5 000 Lead time 12 to 16 days Maximum usage 175 tyres per day Minimum usage 90 tyres per day Average usage 140 tyres per day 1. Calculate the minimum level of inventory 2. Calculate the maximum level of inventory
Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following: (a) Average inventory level (b) The number of orders placed per year (c) The total annual inventory holding cost (d) The total annual ordering cost (e) The total annual cost
1. Electronic Village stocks and sells a particular brand of a personal computer. It costs the store $450 each time it orders with the manufacturer for the personal computers. The annual cost ofcarrying the PCs in inventory is $170. The store manager estimates the annual demand for the PCs will be 1,200 units. a. Determine the optimal order quantity and the total minimum inventory cost. B.Assume that shortages are allowed and that the shortage cost is $600 per unit per year. Compute the optimal order quantity and the total minimum inventory cost. 2. A computer products store stocks color graphics monitors, and the daily demand is normally distributed, with a mean of 1.6 monitors and a standard deviation of 0.4 monitor. The lead time to receive an order from the manufacturer is 15 days. Determine the reorder point that will achievea 98% service level.
4 In the EOQ model, determining the optimal order quantity requires us to ______. a increase number of orders along with quantity ordered at any time b strike a balance between quantity and quality of materials ordered c strike a balance between ordering and holding costs d increase number of orders depending on the volume discounts provided 6 The total cost in the EOQ is ______. a insensitive to minor deviations in the order quantity from the EOQ amount b sensitive to minor deviations in the order quantity from the EOQ amount c insensitive to major deviations in the order quantity from the EOQ amount d sensitive to deviations in the order quantity from the EOQ amount by more than 20% 7 Sales and operations planning deal with ______ decision-making. a strategic b tactical c operational d weekly
The Soon Company is a multinational company that purchases one of its crucial components from a supplier who offers quantity discounts to encourage larger order quantities. The supply chain manager of the company wants to determine the optimal order quantity to minimize the total annual inventory cost. The company’s annual demand forecast for the item is 850 units, the order cost is $10 per order, and the annual holding rate is 41 percent. The price schedule for the item is: Order Quantity Price per Unit ($) 1–150 6.00 151–350 5.50 351 and above 5.00 The first break point is 151 units and the second is 351 units. The spreadsheet is below and perform the required analysis Optimal Order Quantity with Quantity Discounts Annual Demand Forecast 850 Order cost per order $10.00 Annual holding rate 41% Order Quantity Price per unit 1 150 $6.00 151 350 $5.50 351 1.00E+99 $5.00 Feasible? EOQ at the highest…