The optimum production quantity. 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 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

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Students have asked these similar questions

Arthur Meiners is the production manager of Wheel-Rite, a small producer of metal parts. Wheel-Rite supplies Cal-Tex, a larger assembly company, with 11,300wheel bearings each year. This order has been stable for some time. Setup cost forWheel-Rite is $41, and holding cost is $0.60 per wheel bearing per year. Wheel-Rite can produce 490 wheel bearings per day. Cal Tex is a just-in-time manufacturer and requires that 52 bearings be shipped to it each business day. a) What is the optimum production quantity? units (round your response to the nearest whole number). b) What is the maximum number of wheel bearings that will be in inventory at Wheel-Rite? units (round your response to the nearest whole number). c) How many production runs of wheel bearings will Wheel-Rite have in a year? runs (round your response to two decimal places). d) What is the total setup plus holding cost for Wheel-Rite? $ (round your response to two decimal places).

Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,200 flashing lights per year and has the capability of producing 95 per day. Setting up the light production costs $51. The cost of each light is $1.00. The holding cost is $0.15 per light per year. d. What is the total cost per year, including the cost of the lights? (round your response to two decimal places).

Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and the annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: a. What is the EOQ for this component? b. What is the reorder point? c. What are the total annual holding and ordering costs associated with your recommended EOQ?

Answer 2

Question

Chapter 12, Problem 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Expert Solution & Answer

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Answer 3

Question

Chapter 12, Problem 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 12, Problem 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Answer 6

Chapter 12, Problem 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 20P

a)

Summary Introduction

To calculate: The optimum production quantity.

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 maximum inventory level.

Answer 9

b)

Summary Introduction

To calculate: The maximum inventory level.

Answer 10

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

Answer 11

c)

Summary Introduction

To calculate: The number of production runs of wheel bearing in a year.

Answer 12

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Answer 13

d)

Summary Introduction

To calculate: The total of the setup cost and holding cost.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

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Solution Summary: The author explains the economic production quantity, which determines the amount a company or retail outlet should purchase at every order so as to minimize the associated total inventory costs.

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To calculate: The maximum inventory level.

To calculate: The number of production runs of wheel bearing in a year.

To calculate: The total of the setup cost and holding cost.

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