Concept explainers
a)
To calculate: The economic production quantity (EPQ).
Introduction:
Economic production quantity (EPQ):
The economic production quantity is used to determine the amount a company or a retail outlet should purchase at every order so as to minimize the associated total inventory costs. It is done by balancing the holding cost and the ordering cost.
b)
To calculate: The number of production runs per year.
Introduction:
Production runs:
The production run is the development of similar or associated goods by utilizing a particular approach or processes.
c)
To calculate: The maximum inventory level.
Introduction:
Maximum inventory level:
The maximum inventory level is the level of inventory in a firm which should not be exceeded at any circumstances. It is to ensure that the cost of capital is not increased.
d)
To determine: The percentage of time the facility will be producing components.
e)
To determine: The annual cost of ordering and holding inventory.
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- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning