The optimal size of the production run. 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.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300days per year. It has orders for about 11,600 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $51. The cost of each light is $0.95. The holding cost is $0.10 per light per year. a) What is the optimal size of the production run? nothing units (round your response to the nearest whole number).

Manufacture MTN has orders for about 100,000 units of its product for the entire year and has the capability of producing 500 units per day. MTN operates its facility 250 days per year. Setting up the production costs $50. The per unit cost of producing the component is $1. The holding cost is estimated to be $2 per unit per year.a) What is the optimal production order quantity for this product?b) What is the total annual cost MTN incurs using this optimal production order quantity?

HAL Ltd. produces a line of high-capacity disk drives for computers. The housings for the drives are produced in Hamilton, Ontario at a rate of 250 housings per month, and shipped to the main plant in Toronto. The housings cost HAL $100 each to produce, and the setup cost for beginning a production run is $500. HAL uses the drive housings at a fairly steady rate of 1400 per year. Assume an annual interest rate of 25% for determining the holding cost. What is the optimal number of housings for HAL to produce in each production run? For the optimal production size, what proportion of each production cycle consists of uptime and what proportion consists of downtime? Assuming that HAL produces the optimal number of housings in each production run, what is the maximum on-hand inventory level of these housings? What is the annual cost of holding and setup?

Answer 2

Question

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Answer 6

Chapter 12, Problem 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 19P

a)

Summary Introduction

To calculate: The optimal size of the production run.

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 average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

Answer 9

b)

Summary Introduction

To calculate: The average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

Answer 10

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

Answer 11

c)

Summary Introduction

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

Answer 12

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Answer 13

d)

Summary Introduction

To calculate: The total cost including the cost of lights per year.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 17

Ch. 12 - Ethical Dilemma Wayne Hills Hospital in tiny...Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - What is the purpose of the ABC classification...Ch. 12 - Prob. 4DQ Ch. 12 - Explain the major assumptions of the basic EOQ...Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - What impact does a decrease in setup time hive on...

Solution Summary: The author calculates the optimal size of the production run by balancing the holding cost and the ordering cost.

Concept explainers

Videos

To calculate: The average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

To calculate: The total cost including the cost of lights per year.

Want to see the full answer?

Chapter 12 Solutions

Solution Summary: The author calculates the optimal size of the production run by balancing the holding cost and the ordering cost.

Concept explainers

Videos

To calculate: The average holding cost per year. Introduction: Average holding cost: The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

To calculate: The average setup cost per year. Introduction: Average setup cost: The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.

To calculate: The total cost including the cost of lights per year.

Want to see the full answer?

Chapter 12 Solutions

To calculate: The average holding cost per year.

Introduction:

Average holding cost:

The average holding cost is the cost associated with storing the inventory of unsold items. It will also consider the cost of loss of goods, labor and other associated costs.

To calculate: The average setup cost per year.

Introduction:

Average setup cost:

The average setup cost is the expense involved in setting up a business which includes the machinery, labor, infrastructure and the cost of other associated requirements.