Concept explainers
a)
To analyze: The effect on EOQ and total cost due to a 40% increase in demand.
Introduction:
Economic order quantity (EOQ):
EOQ is the quantity of units that must be ordered at a time to an inventory to lessen the total costs of inventory. It is calculated to identify the ideal quantity of units depending on the demand.
b)
To analyze: The effect on EOQ and total cost due to a 20% increase in carrying cost.
Introduction:
Economic order quantity (EOQ):
EOQ is the quantity of units that must be ordered at a time to an inventory to lessen the total costs of inventory. It is calculated to identify the ideal quantity of units depending on the demand.
c)
To study: The relationship between the lot size and carrying cost.
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OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
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- Give typed solution and explanation of all subparts Don't upload type of photos Kamran Paint Company uses 60,000 gallons of pigment per year. The cost of ordering pigment is Tk.200 per order, and the cost of carrying the pigment in inventory is Tk.1.00 per year. The firm uses pigment at a constant rate every day throughout the year.? p =TK,s a. How much pigment should the firm order every time to minimize on total costs? b. Calculate the total cost of the plan? C. Determine the total number of orders suggested by the plan. d Assuming that it takes 20 days to receive an order once it has been placed, determine the level of pigment storage at which the firm has to place the next order of pigment. e. What are the average and maximum values of inventory for the firm?arrow_forwardA large bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 per bag. a. Determine the economic order quantity. (Round your final answer to the nearest whole number.) Economic order quantity bags b. What is the average number of bags on hand? (Round your final answer to the nearest whole number.) Average number of bags c. How many orders per year will there be? (Round your final answer to the nearest whole number.) Number of orders per year d. Compute the total cost of ordering and carrying flour. (Round your final answer to the nearest whole number. Omit the "$" sign in your response.) Total cost $ e. If annual holding costs were to increase by $9 per bag, how much would that affect the minimum total annual cost? (Round your intermediate calculations to 2 decimal places and final…arrow_forwardPls do fast within 5 minutes and i will give like for sure Solution must be in typed form Taylor Supply is a wholesaler of office supplies and equipment. Taylor purchases cartons of staples from Barker Manufacturing. Barker offers a price of $7 per carton of staples. Taylor incurs a fixed charge of $90 per order to cover order equipment and clerical costs. Each order takes 3 days to arrive . Taylor has projected sales to be 603 boxes per day. Taylor's accounting department has determined the holding costs relevant for inventory decisions are 28% of unit cost. Assume Q=3000. What is the demand for staples during lead time? 1) Assume Q=3000. What is the demand for staples during lead time? 2) Assume Q=3000. What z value is associated with a 90% confidence level? 3) Assume Q=3000. If Taylor wants a 90% service level, and the standard deviation in daily demand is 250, what is the appropriate reorder point? 4) Assume Q=3000. If Taylor wants to improve their service level to 95%, and…arrow_forward
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- ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (C) Reorder Point and Economic Order Quantity19. What would the average number of boxes be if the safety stock from Part A was kept and the EOQ from Part Bwas followed? Round off to two decimal places.20. How much would the carrying cost for the year be based on item 19?21. How much would the total inventory related (ordering plus carrying) costs be if the…arrow_forwardABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (B) Economic Order Quantity 1. How much would the total inventory related (ordering plus carrying) costs be if the economic order quantity wasfollowed (excluding safety stock)? (D) Cost-Benefit Analysis: If ABC maintains its current inventory policy for the year,1. How much would the entity save it followed the reorder point and economic order quantity models?…arrow_forwardABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. 18. Explain what would happen to the ordering cost, carrying cost and total inventory-related costs if the entity doesnot follow the economic order quantity based on the previous numbersarrow_forward
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