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.

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Answer 1

Question

Chapter 12, Problem 18P

a)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

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Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 300 per day, and it uses these subcomponents at a rate of 12,500 per year (of 250 working days). Holding costs are $2.00 per item per year, and ordering costs are $30.00 per order. Part 2 a) What is the economic production quantity? _________ units (round your response to two decimal places). Part 3 b) How many production runs per year will be made? _________ production runs (round your response to two decimal places). Part 4 c) What will be the maximum inventory level? _______ units (round your response to two decimal places). Part 5 d) What percentage of time will the facility be producing components? _________% (enter your response as a percentage rounded to two decimal places). Part 6 e) What is the annual cost of ordering and holding inventory? $_________ (round your response to two decimal places).

Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 305 per day, and it uses these subcomponents at a rate of 12,500 per year (of 250 working days). Holding costs are $2 per item per year, and ordering costs are $32 per order. a) What is the economic production quantity?b) How many production runs per year will be made?c) What will be the maximum inventory level?d) What percentage of time will the facility be producing components?e) What is the annual cost of ordering and holding inventory?

Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 2,500 rolls. The cost per roll is $800, and the annual holding cost is 15 percent of the cost. Each order costs $50 to process.a. How many rolls should Yellow Press, Inc., order at a time?b. What is the time between orders?

Answer 2

Question

Chapter 12, Problem 18P

a)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

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Answer 3

Question

Chapter 12, Problem 18P

a)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 18P

a)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 18P

a)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

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)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

Answer 6

Chapter 12, Problem 18P

a)

Summary Introduction

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.

Answer 7

Chapter 12, Problem 18P

a)

Summary Introduction

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.

Answer 8

b)

Summary Introduction

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.

Answer 9

b)

Summary Introduction

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.

Answer 10

c)

Summary Introduction

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.

Answer 11

c)

Summary Introduction

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.

Answer 12

d)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

Answer 13

d)

Summary Introduction

To determine: The percentage of time the facility will be producing components.

Answer 14

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

Answer 15

e)

Summary Introduction

To determine: The annual cost of ordering and holding inventory.

Answer 16

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Answer 17

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Answer 18

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Answer 19

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Solution Summary: The author calculates the economic production quantity (EPQ) by balancing the holding cost and the ordering cost.

Concept explainers

Videos

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.

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.

To determine: The percentage of time the facility will be producing components.

To determine: The annual cost of ordering and holding inventory.

Want to see the full answer?

Chapter 12 Solutions

Solution Summary: The author calculates the economic production quantity (EPQ) by balancing the holding cost and the ordering cost.

Concept explainers

Videos

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.

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.

To determine: The percentage of time the facility will be producing components.

To determine: The annual cost of ordering and holding inventory.

Want to see the full answer?

Chapter 12 Solutions

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.

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.