Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 12, Problem 6P
Summary Introduction
To classify: The given items into categories of A, B, and C.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
1. The KIKO LTDA company manufactures sporting goods. Its monthly demand is 1000 units and each week it produces 923 units. The cost of each production run is $ 100 and the holding of each sporting item is 86 cents per week. The company works 250 business days in the year and the supplies it requires have a delivery time of 6 business days. With this information, it is requested to establish inventory policies that answer the following questions:
a. The economic quantity to be produced.
b. The reorder point
c. The total annual cost of inventory
d. The cycle time
e. Number of runs per year
f. Duration of a production run
plz answer 'e' and 'f' part
1. The KIKO LTDA company manufactures sporting goods. Its monthly demand is 1000 units and each week it produces 923 units. The cost of each production run is $ 100 and the holding of each sporting item is 86 cents per week. The company works 250 business days in the year and the supplies it requires have a delivery time of 6 business days. With this information, it is requested to establish inventory policies that answer the following questions:
a. The economic quantity to be produced.
b. The reorder point
c. The total annual cost of inventory
d. The cycle time
e. Number of runs per year
f. Duration of a production run
Anglo American Platinum uses ABC analysis as an inventory categorisation method. The current inventory ordering policy is to order 10 000 units of an ‘A’-item inventory when the level falls to 4 500 units. Forecast demand to meet production requirements during the next year is 62 500 units. The cost of placing and processing an order relating to this inventory item is R250, while the cost of holding a unit in store is R50 per unit per year. You anticipate that both costs will be constant during the next year. Orders are received two weeks after being placed with the supplier. Assume a 50-week year and that demand is constant throughout the year.
Using a quantitative analysis, appraise the optimality of the current ordering policy of the ‘A’-item inventory (Show all calculations).
Chapter 12 Solutions
Principles Of Operations Management
Ch. 12 - Ethical Dilemma Wayne Hills Hospital in tiny...Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - What is the purpose of the ABC classification...Ch. 12 - Prob. 4DQCh. 12 - Explain the major assumptions of the basic EOQ...Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - What impact does a decrease in setup time hive on...
Ch. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Explain the following: All things being equal, the...Ch. 12 - Prob. 13DQCh. 12 - Prob. 14DQCh. 12 - Prob. 15DQCh. 12 - When demand is not constant, the reorder point is...Ch. 12 - Prob. 17DQCh. 12 - State a major advantage, and a major disadvantage,...Ch. 12 - L. Houts Plastics it a large manufacturer of...Ch. 12 - Prob. 2PCh. 12 - Jean-Mane Bourjollys restaurant has the following...Ch. 12 - Lindsay Electronics, a small manufacturer of...Ch. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - William Sevilles computer training school, in...Ch. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 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 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Cesar Rego Computers, a Mississippi chain of...Ch. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - M. P. VanOyen Manufacturing has gone out on bid...Ch. 12 - Chris Sandvig Irrigation, Inc., has summarized the...Ch. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Barbara Flynn is in charge of maintaining hospital...Ch. 12 - Prob. 42PCh. 12 - Authentic Thai rattan chairs (shown in the photo)...Ch. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Gainesville Cigar stocks Cuban agars that have...Ch. 12 - A gourmet coffee shop in downtown San Francisco is...Ch. 12 - Prob. 50PCh. 12 - Prob. 51PCh. 12 - Henrique Correas bakery prepares all its cakes...Ch. 12 - Prob. 53PCh. 12 - Prob. 1CSCh. 12 - Prob. 2CSCh. 12 - Prob. 3CSCh. 12 - Prob. 1.1VCCh. 12 - Prob. 1.2VCCh. 12 - Prob. 1.3VCCh. 12 - Prob. 1.4VCCh. 12 - Prob. 1.5VCCh. 12 - Prob. 1.6VCCh. 12 - Prob. 1.7VCCh. 12 - Prob. 2.1VCCh. 12 - Prob. 2.2VCCh. 12 - Prob. 2.3VCCh. 12 - Prob. 2.4VCCh. 12 - Inventory Control at Wheeled Coach Controlling...Ch. 12 - Prob. 3.2VCCh. 12 - Inventory Control at Wheeled Coach Controlling...
Knowledge Booster
Learn more about
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
- In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $1,900 11 $13,800 2 12,700 12 1,000 3 2,700 13 43,600 4 51,800 14 10,600 5 10,300 15 1,600 6 1,200 16 10,900 7 2,500 17 4,500 8 11,700 18 63,200 9 5,600 19 4,000 10 15,800 20 3,400 a. Classify each item in inventory using an ABC plan. item # Class (A, B, or C) 1 2 3 4 5 6 7 8 9 10arrow_forwardHayes electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters as follows: (a) both ordering cost and carrying cost are 10% less that originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.arrow_forwardThe demand for a clothing brand is shown in the table below. The cost per order is about $4000. Cost of each unit of clothing = $5. Carrying cost percentage = 25% per item per 5 months. The analysis period = 5 month duration. Month Demand 1 400 2 300 3 200 4 400 5 500 a. Using this data, compute the solutions using the Lot for Lot and Periodic Order Quantity heuristics? Which of these heuristics would perform better and why? b. Assuming that the demand follows a normal distribution with the mean and variance from the data given above, determine the optimal order should be greater or lesser than the single period EOQ model.arrow_forward
- In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,500 11 $ 13,000 2 12,000 12 600 3 2,200 13 42,000 4 50,000 14 9,900 5 9,600 15 1,200 6 750 16 10,200 7 2,000 17 4,000 8 11,000 18 61,000 9 800 19 3,500 10 15,000 20 2,900 a. Classify each item in inventory using an ABC planarrow_forwardHayes Electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters: (a) Both ordering cost and carrying cost are 10% less than originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.arrow_forwardBrock Co. adopted the dollar-value LIFO inventory method as of January 1, year 1. A single inventory pool and an internally computed price index are used to compute Brock’s LIFO inventory layers. Information about Brock’s dollar-value inventory follows: What was Brock’s dollar-value LIFO inventory at December 31, year 2? a. $80,000 b. $74,000 c. $66,000 d. $60,000arrow_forward
- Problem 20-40 (Algo) In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,600 11 $ 13,200 2 12,200 12 700 3 2,300 13 42,400 4 50,500 14 10,100 5 11,600 15 1,300 6 900 16 10,400 7 2,100 17 4,100 8 11,200 18 61,600 9 5,200 19 3,600 10 15,200 20 3,000 a. Classify each item in inventory using an ABC plan.arrow_forwardThe two most important inventory-based questionsanswered by the typical inventory model are:a) when to place an order and the cost of the order.b) when to place an order and how much of an itemto order.c) how much of an item to order and the cost of the order.d) how much of an item to order and with whom theorder should be placed.arrow_forwardA company manufactures two products A and B. Each A requires two C’s and one D. Each D requires two F’s and one E, while each E requires one F. Each product B requires one D and two E’s. The table below shows data from the inventory records. ITEM ITEM ITEM ITEM DATA CATEGORY C D E F Lot - sizing rule Fixed Order Quantity = 220 Lot for Lot Fixed Order Quantity = 300 Period Order Quantity P = 2 Lead time 3 weeks 2 weeks 3 weeks 2 weeks Scheduled receipts 280 (week 1) None 300 (week 3) None Beginning inventory 25 0 150 600 The MPS for product A calls for 85 units to be started in week 3 and 100 units to be started in week 6. The MPS for product B calls for 180 units to be started in week 5.Develop the material requirements plan (showing Gross requirements, Scheduled receipts, On hand inventory, Net requirements, and Planned-order release) for the next six weeks for items C, D, E and F.arrow_forward
- Your objective is to help company by determining EOQ* (Economic Order Quantity) that minimizes the totalinventory cost for a company that sells ceiling fans. Your worksheet provides information about the currentorder quantity, demand quantity and other costs.Questions: Answer A and Ba. With the current order quantity, what is the total cost of inventory?b. Implement the problem in Excel and find the order quantity (EOQ) (round to nearest integer) that givesminimum inventory cost. Note: this is a Non-linear programming, hence select “GRG Nonlinear” method inSolver- How much money would company save by switching to optimum quantity from current orderquantity?arrow_forwardAssessment of Inventory Management Practices in the Construction Industry in the Philippines-by Ma. Remedios F. Mendoza and Renato B. Garbo Jr. The Application of Automated Inventory Management System in the Construction Industry in the Philippines- by Alvin C. Custodio and Reynaldo B. Hizon Jr. Digital Inventory Management System for Construction Materials in the Philippines- by Anfernee Jade C. Herrera and Ernesto C. Enriquez. An Analysis of Inventory Management Practices in the Philippine Construction Industry- by Ricardo C. Reyes and Michelle P. Vasquez. Evaluation of Inventory Management Practices in the Construction Industry in the Philippines: A Case Study- by Jomar P. Albao and Albert M. Ramos. Inventory Management Practices in Construction Firms in the Philippines- by Jasmin A. Sison and Jocelyn A. Valiente. The Role of Digitalization in Inventory Management in the Philippine Construction Industry- by Ariel T. Dignadice and Marcelino P. Fabros Jr. An Assessment…arrow_forwardAssessment of Inventory Management Practices in the Construction Industry in the Philippines-by Ma. Remedios F. Mendoza and Renato B. Garbo Jr. The Application of Automated Inventory Management System in the Construction Industry in the Philippines- by Alvin C. Custodio and Reynaldo B. Hizon Jr. Digital Inventory Management System for Construction Materials in the Philippines- by Anfernee Jade C. Herrera and Ernesto C. Enriquez. An Analysis of Inventory Management Practices in the Philippine Construction Industry- by Ricardo C. Reyes and Michelle P. Vasquez. Evaluation of Inventory Management Practices in the Construction Industry in the Philippines: A Case Study- by Jomar P. Albao and Albert M. Ramos. Inventory Management Practices in Construction Firms in the Philippines- by Jasmin A. Sison and Jocelyn A. Valiente. The Role of Digitalization in Inventory Management in the Philippine Construction Industry- by Ariel T. Dignadice and Marcelino P. Fabros Jr. An Assessment…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY