EBK OPERATIONS MANAGEMENT
11th Edition
ISBN: 8220103630726
Author: RENDER
Publisher: PEARSON
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Chapter 12, Problem 26P
Question
••• 12.26 Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $50 per order. The cost
- a. What is the economic order quantity for each supplier?
- b. What quantity should be ordered, and which supplier should be used?
- c. What is the total cost for the most economic order size?
- d. What factor(s) should be considered besides total cost?
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QUESTION 3
Given the following inventory information, construct an (a) ABC analysis by annual dollar usage, (b) ABC analysis by current inventory value, and (c) an ABC inventory matrix. Is the firm stocking the correct inventories?
Item Number
Unit Cost
Annual Usage
Phy Inv
B8867
6
100
8,000
J1252
5.25
6,500
120
K9667
0.88
4,000
1,000
L2425
1
1,500
375
M4554
5.5
2,000
500
T6334
70
500
800
W9856
0.75
800
20,000
X2215
1.5
8,000
2,000
Y3214
32
1,000
500
Y6339
4
3,500
125
Calculate the annual usage for K9667.
Question 2: Metro Tech buys three components from a local wholesaler. The annual demand
for components A, B, and C is 500, 3000, and 6000 units respectively. The agreed purchase
price is $20, $15, and $10per unit for A, B, and C respectively for each product. The holding
cost is estimated to be 20% per year. The ordering cost consists of handling and trucking
costs. The handling cost is $100 for each type of component regardless of the number of items
ordered. In addition to the handling cost, Metro Tech must pay a trucking cost of $500 for each
delivery regardless of the total number of components in the order. Currently, all three items
are being ordered independently using EOQ models. A proposal has been made to combine the
ordering of the three items to save on trucking costs. Analyze the current and the prosed
scenario and show the results below.
Input Data:
Demand items/year
Item Cost in $/item
Holding Cost as %/year
Ordering Cost $/order
# of Orders/ year
Economic Order Quantity…
Q2. From the figures given below, calculate Economic Order Quantity (EOQ) and Total cost at EOQ?
10,000 kgs
Rs. 2 per kg
Buying cost per order Rs. 50
Carrying and storage cost 8%||
Total consumption of material per year
Unit cost of material
Chapter 12 Solutions
EBK OPERATIONS MANAGEMENT
Ch. 12 - Question 1. Describe the four types of inventory.Ch. 12 - Question
2. With the advent of low-cost...Ch. 12 - Question
3. What is the purpose of the ABC...Ch. 12 - Question
4. Identify and explain the types of...Ch. 12 - Question 5. Explain the major assumptions of the...Ch. 12 - Question 6. What is the relationship of the...Ch. 12 - Question
7. Explain why it is not necessary to...Ch. 12 - Question 8. What are the advantages of cycle...Ch. 12 - What impact does a decrease in setup time have on...Ch. 12 - When quantity discounts are offered, why is it not...
Ch. 12 - What is meant by service level?Ch. 12 - Explain the following: All things being equal, the...Ch. 12 - Describe the difference between a fixed-quantity...Ch. 12 - Explain what is meant by the expression robust...Ch. 12 -
15. What is “safety stock”? What does safety...Ch. 12 - When demand is not constant, the reorder point is...Ch. 12 - How are inventory levels monitored in retail...Ch. 12 - State a major advantage, and a major disadvantage,...Ch. 12 - L. Houts Plastics is a large manufacturer of...Ch. 12 - Boreki Enterprises has the following 10 items in...Ch. 12 - Jean-Marie Bourjollys restaurant has the following...Ch. 12 - Lindsay Electronics, a small manufacturer of...Ch. 12 - William Bevilles computer training school, in...Ch. 12 - • 12.6 If D = 8,000 per month, S = $45 per order,...Ch. 12 - Henry Crouchs law office has traditionally ordered...Ch. 12 - Matthew Liotines Dream Store sells beds and...Ch. 12 - Southeastern Bell stocks a certain switch...Ch. 12 - Lead time for one of your fastest-moving products...Ch. 12 - Annual demand for the notebook binders at Duncans...Ch. 12 - Thomas Kratzer is the purchasing manager for the...Ch. 12 - Joe Henrys machine shop uses 2,500 brackets during...Ch. 12 - Abey Kuruvilla, of Parkside Plumbing, uses 1,200...Ch. 12 - ••• 12.15 M. Cotteleer Electronics supplies...Ch. 12 - •• 12.16 Race One Motors is an Indonesian car...Ch. 12 - Radovilsky Manufacturing Company, in Hayward,...Ch. 12 - Arthur Meiners is the production manager of...Ch. 12 - Cesar Rego Computers, a Mississippi chain of...Ch. 12 - Bell Computers purchases integrated chips at 350...Ch. 12 - Wang Distributors has an annual demand for an...Ch. 12 - Question 12.22 The catering manager of La Vista...Ch. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Question 12.26 Emery Pharmaceutical uses an...Ch. 12 - Question 12.27 Barbara Flynn is in charge of...Ch. 12 - Question 12.28 Based on available information,...Ch. 12 - Question 12.29 Authentic Thai rattan chairs...Ch. 12 - Question 12.30 Tobacco is shipped from North...Ch. 12 - Prob. 31PCh. 12 - Question 12.32 Chicagos Hard Rock Hotel...Ch. 12 - Question 12.33 First Printing has contracts with...Ch. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Question 12.36 Cynthia Knotts oyster bar buys...Ch. 12 - Question 12.37 Henrique Correas bakery prepares...Ch. 12 - Question 12.38 University of Florida football...Ch. 12 - Prob. 39PCh. 12 - Question 12.40 A gourmet coffee shop in downtown...Ch. 12 - Question Zhou Bicycle Company Zhou Bicycle...Ch. 12 - Question Zhou Bicycle Company Zhou Bicycle...Ch. 12 - Question Zhou Bicycle Company Zhou Bicycle...Ch. 12 - Parker Hi-Fi Systems Parker Hi-Fi Systems, located...Ch. 12 - Parker Hi-Fi Systems Parker Hi-Fi Systems, located...Ch. 12 - Parker Hi-Fi Systems Parker Hi-Fi Systems, located...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Question Frito-Lay has flourished since its...Ch. 12 - Inventory Control at Wheeled Coach Video Case...Ch. 12 - Prob. 2.2VCCh. 12 - Prob. 2.3VC
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Question 7 Firm develop new products to a.gain market share and build brand equity b.keep their research and development teams gainfully employed c.take up slack in capacity d.gain first mover advantage and eliminate waste Question 8 Economic order quantity (EOQ) assumes all of the following conditions apply .demand is known and is constant over time .there are no shortages allowed.lead time for the receipt of orders is constant.Order quantity is received all at once true or false? question 10 Trade-offs in the new product development relate to A.Product / service design, time to market and profitability B.Proft. Expenditure and market share C.Time. cost and quality D.Market reach, product / service design and timingarrow_forwardDifferences between Fixed–Order Quantity and Fixed–Time Period?arrow_forwardWhat are the distinctions between Fixed-Order Quantity andFixed-Time Period?arrow_forward
- Explain the quantity of economic order (EOQ) and its effect on operating costs.arrow_forwardQUESTION 1 The sales of Vintage company is 80,000 units per year. The percentage of storage is 20 percent of inventory value. The purchase price is RM20 per unit and the ordering cost of each order is RM1,000. Lead time is 2 weeks. Assume that there are 52 weeks in your calculation. Pleaase Provide Calculation Step Calculate: d) Total Inventory Cost e) Reorder point f) How many placements of order per year?arrow_forwardQ.9.1 Calculate safety stock given the following information: Averaged Demand: 350 items; Standard deviation during the lead time = 10 items; 5 % stock out policy Q.9.2. Calculate ROP and SS. Average daily demand (normally distributed) =15 units Standard deviation= 5 units; Lead time is constant at 2 days; 90% Service Level Desiredarrow_forward
- QUESTION 1 The sales of Vintage company is 80,000 units per year. The percentage of storage is 20 percent of inventory value. The purchase price is RM20 per unit and the ordering cost of each order is RM1,000. Lead time is 2 weeks. Assume that there are 52 weeks in your calculation. Pleaase Provide Calculation Step Calculate: a) EOQ b) Total Carrying Cost c) Total Ordering Cost d) Total Inventory Cost e) Reorder point f) How many placements of order per year?arrow_forwardQUESTION 15 ID-planned order release using EOQ technique Clancy's Motors has the following demand to meet for custom manufactured fuel injector parts. The holding cost for that item is $2 per month and each setup costs $80. Lead time is 0 months. Calculate the planned order releases using: the EOQ technique including the holding cost of any inventory left over after month 7? Month Requirement 1 400 What is the total cost? 2016 2509 1405 1536 2 150 3 200 150 100 150 250arrow_forwardQUESTION 1 Mr Mathebula sells high end music systems. He orders his produets once a year. His re-order point without any safety stock is 500 units. Inventory cost is R25 per month and the cost of a stock-out is R200 per set per year. Given the following demand probabilities determine a recommended safety stock level. Demand during lead Probability time .1 250 .25 500 .5 750 .1 1000 .05 1arrow_forward
- Q4. What are the various types of inventory? Explain each type in brief.arrow_forward16. Cheryl Hunter is responsible for maintaining adequate hospital supplies atfictional St. Thomas Hospital. The demand and lead times for syringes are assumedto be constant. During the past year, the daily demand for syringes was 80 units, andthe lead time from the supplier was 4 days. What is the reorder point?arrow_forwardQ2) Clancy's Motors has the following demand to meet for custom manufactured fuel injector parts. The holding cost for that item is $2 per month and each setup costs $80. Lead time is 0 months. Calculate the planned order releases using: (a) the EOQ technique, and (b) the POQ technique. And What are the costs of each plan, including the holding cost of any inventory left over after month 7? What technique performance is better. Month 1 2 3 4 5 6 7 Requirement 400 150 200 150 100 150 250 Answer: (a) The monthly holding cost = $2/month Average monthly demand = ??? units The EOQ = ??? units Total inventory held = ??? units Setup costs = $??? Holding cost = $???? Total cost = $???? (b) POQ Interval = ?.??, round to # month. Total inventory held = ? units Setup costs = $??? Holding cost = $? Total cost = $???arrow_forward
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