Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
12th Edition
ISBN: 9780134741062
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter C, Problem 2P
A
Summary Introduction
Interpretation: The economic production lot size (ELS) is to be calculated.
Concept Introduction: ELS (economic production lot size) refers to lot size where total cost is minimum on consideration of balance between ordering cost and carrying cost
B
Summary Introduction
Interpretation: The setup cost and inventory holding cost per annum are to be calculated.
Concept Introduction: Setup is the cost to borne by the company for making ready of machinery to produce a fresh batch of goodsand inventory holding cost refers to costs associated with unsold stock
C
Summary Introduction
Interpretation: The TBO or cycle length for the ELS should be calculated.
Concept Introduction: TBO orcyclelength for ELS is division of ELS by demand
D
Summary Introduction
Interpretation: The production time per lot should be calculated.
Concept Introduction:Dividing lot size with production rate is production rate
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Sharpe Cutter is a small company that produces specialty knives for paper cutting machinery. The annual demand for a particular type of knife is 100,000 units. The demand is uniform over the 250 working days in a year. Sharpe Cutter produces this type of knife in lots and, on average, can produce 450 knives a day. The cost to set up a production lot is $300,and the annual holding cost is $1.20 per knife.a. Determine the economic production lot size (ELS).b. Determine the total annual setup and inventory holding cost for this item.c. Determine the TBO, or cycle length, for the ELS.d. Determine the production time per lot.
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?
A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 poundsannually. The beans are purchased from a local supplier for $2.40 per pound. The coffeehouse estimates that it costs $45 in paperwork and labor to place an order for thecoffee, and holding costs are based on a 20 percent annual interest rate.c. What is the average annual cost of holding and setup due to this item?
Chapter C Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
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