Wheel-Rite, a small producer of metal parts, supplies XYZ, a larger assembly company, with 10,000 wheel bearings each year. The setup cost for Wheel-Rite is $40 and the holding cost is $0.2 per wheel bearing per year. Wheel-Rite can produce 600 wheel bearings per day. XYZ requires that 50 bearings be shipped to it each business day. What is the maximum number of wheel bearings that will be in inventory at Wheel- Rite? Specify as a whole number by rounding the final result. (You will need to first compute the economic lot size, that is, the economic order quantity in the production setting. Use the correct formula for this situation)

Wheel-Rite, a small producer of metal parts, supplies XYZ, a larger assembly company, with 10,000 wheel bearings each year. The setup cost for Wheel-Rite is $40 and the holding cost is $0.2 per wheel bearing per year. Wheel-Rite can produce 600 wheel bearings per day. XYZ requires that 50 bearings be shipped to it each business day. What is the maximum number of wheel bearings that will be in inventory at Wheel- Rite? Specify as a whole number by rounding the final result. (You will need to first compute the economic lot size, that is, the economic order quantity in the production setting. Use the correct formula for this situation)

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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Similar questions

The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. What quantity should be ordered, and which supplier should be used? Discuss factor(s) should be considered besides total cost.
Al Fursan Inc. needs 310 kgs of a material per month (four weeks). It costs RO 10 to make and receive an order, and it takes 16 work days to receive it. The annual holding cost is 25 % of purchase price The price RO1 per kg. The company is operating 6 days per week What is the minimum annual total holding and ordering cost? Round-up to the nearest integer?
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Joe Henry's machine shop uses 2,460 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand 2,460 Holding cost per bracket per year $1.55 Order cost per order $19.50 Lead time 2 days Working days per year 250 Part 2 a) What is the EOQ? enter your response here units (round your response to two decimal places). Part 3 b) What is the average inventory if the EOQ is used? enter your response here units (round your response to two decimal places). What would be the annual inventory holding cost? $enter your response here (round your response to two decimal places). Part 4 c) Given the EOQ, how many orders will be made annually? enter your response here orders (round your response to two decimal places). What would be the annual order cost? $enter your response here (round…
Arthur Meiners is the production manager for Wheel-Rite, a small manufacturer of metal parts. Wheel-Rite sells 10,378 gear wheels each year. Wheel-Rite setup cost is $45 and maintenance cost is $0.60 per sprocket per year. Wheel-Rite can produce 493 gear wheels per day. The daily demand for the gear wheels is 51 units. Show your work. 1. What inventory management model should we use to solve this problem? Model for discount purchases Model Economic Quantity to Order Model Economic Quantity to Produce Model to handle dependent demand 2. What is the optimal amount of production? Response 3. What is the maximum inventory level of gear wheels that will be in the Wheel-Rite warehouse? Response 4. What is Wheel-Rite's annual setup cost? Response 5. What is the annual cost of maintaining Wheel-Rite? Response
My Kitchen Delights (MKD), a regional producer ofgourmet jams and jellies, uses approximately 24,000 glass jarseach month during its production. Because of space limitations,MKD orders 5000 jars at a time. Monthly holding cost is $0.08 perjar, and the ordering cost is $60 per order. Th e company operates20 days per month.(a) What penalty cost is the company incurring by its presentreplenishment policy?(b) MKD would prefer to order eight times each month butneeds to justify any change in order size. How muchwould ordering cost need to be reduced to justify a lot sizeof 3000 jars?(c) If MKD can reduce its ordering cost to $30, what is theoptimal replenishment order quantity?
Per Norstrom supplies computer systems to a warehouse in Rotterdam. He sells 16 systems a week. The cost of an average system is €5000, while order administration costs and delivery from Malaysia cost €1000. The lead time is around 4 weeks and holding costs are around 16 percent a year. What policy would you recommend for Per?
Sarah’s Organic Soap Company makes organic liquid soap. One of the raw materials for her soaps is organic palm oil. She needs 1000 kg of palm oil per day, on average. The supplier charges a $60 delivery fee per order (which is independent of the order size) and $4.75 per kg. Sarah’s annual holding cost is 25 percent. Assume she operates and sells five days per week, 52 weeks per year. a. If Sarah wants to minimize her annual ordering and inventory holding costs, how much palm oil should she purchase with each order (in kg)? b. If Sarah orders 4000 kg with each order, what would be the annual sum of the ordering and holding costs? c. If Sarah orders 8000 kg with each order, what would be the sum of the ordering and holding costs per kg sold? d. Sarah’s supplier is willing to sell her palm oil at a 5 percent discount if she purchases 15,000 kg at a time. If she were to purchase 15,000 kg per order, what would be her annual sum of the ordering and holding costs?
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Sunstar Ice Cream Sells 12,000 gallons of ice cream each month from its central storagefacility. Monthly carrying cost are P.10 per gallon and ordering cost are P50 per order.Ignore potential stockout cost and assume a 30 days month. What is the optimal length of the inventory cycle?How many orders will be placed per month?
Tacky Souvenirs sells lovely handmade tablecloths at its islandstore. These tablecloths cost Tacky $15 each. Customers wantto buy the tablecloths at a rate of 240 per week. The companyoperates 52 weeks per year. Tacky, the owner, estimates hisordering cost at $50. Annual holding costs are 20 percent of theunit cost. Lead time is 2 weeks. Using the information given,(a) Calculate the economic order quantity.(b) Calculate the total annual costs using the EOQ.(c) Determine the reorder point.