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
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter C, Problem 4P
One-Eyed Toad Pottery makes custom planters for up-scale clients. The average demand for planters is 20 per week. One-Eyed Toad’s production facility has the capacity to make 25 planters per week. Setup cost is $1,500. The value of finished goods inventory is $250 per planter. The annual per-unit inventory holding cost is 35 percent of the item’s value.
- What is the economic production lot size (ELS)?
- What is the average time between orders (TBO)?
- What is the total of the annual holding cost all and setup cost?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
One-Eyed Toad Pottery makes custom planters for up-scaleclients. The average demand for planters is 20 per week.One-Eyed Toad’s production facility has the capacity to make25 planters per week. Setup cost is $1500. The value of finishedgoods inventory is $250 per planter. The annual per-unitinventory holding cost is 35 percent of the item’s value.a. What is the economic production lot size (ELS)?b. What is the average time between orders (TBO)?c. What is the total of the annual holding cost and setupcost?
Joe Henry's machine shop uses 2,450 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:
Annual demand
2,450
Holding cost per bracket per year
$1.65
Order cost per order
$18.50
Lead time
2 days
Working days per year
250
a) What is the EOQ? __units (round your response to two decimal places).
b) What is the average inventory if the EOQ is used?__ units (round your response to two decimal places).
What would be the annual inventory holding cost? $__ (round your response to two decimal places).
c) Given the EOQ, how many orders will be made annually?__orders (round your response to two decimal places).
What would be the annual order cost? $__ (round your response to two decimal places).
d) Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? __ $ (round your response to two decimal places).
d)…
Joe Henry's machine shop uses 2,500 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:
Annual demand
2,500
Holding cost per bracket per year
$1.50
Order cost per order
$18.75
Lead time
2 days
Working days per year
250
a)
What is the EOQ?units (round your response to two decimal places).
Chapter C Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
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
- Joe Henry's machine shop uses 2,530 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand 2,530 Holding cost per bracket per year $1.65 Order cost per order $18.25 Lead time 2 days Working days per year 250 Part 2 a) What is the EOQ? enter your response here units (round your response to two decimal places). Part 3 b) What is the average inventory if the EOQ is used? enter your response here units (round your response to two decimal places). What would be the annual inventory holding cost? $enter your response here (round your response to two decimal places). Part 4 c) Given the EOQ, how many orders will be made annually? enter your response here orders (round your response to two decimal places). What would be the annual order cost? $enter your response here (round…arrow_forwardThe Cerebro Computer Store purchase printers for $100 each. Demand for this is constant during the year, and annual demand is forecasted to be 1350 units. The holding cost is $20 per unit per year, while the cost of ordering is $90 per order. There are 270 working days per year and the lead-time is 8 days. What is the annual order cost? Enter your answer with two decimal places.arrow_forwardI need help. It is due today. The answer for question b, 465 units is false/not correct The two images are the examples on how to solve the problem. 1. Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is available on the item. The firm operates 52 weeks in a year. Refer to the standard normal table for z-values. ≻Demand = 78,000 units/year ≻Ordering cost = $30.00/order ≻Holding cost = $3.00/unit/year ≻Average lead time = 1 week ≻Standard deviation of weekly demand = 200 units The answer for a is: a. The economic order quantity for this item is 1249 units.(Enter your response rounded to the nearest whole number.) FIND b, please b. If Petromax wants to provide a 98% service level, the safety stock is "what?" units (enter your response rounded to the nearest whole number)arrow_forward
- Yellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 2,500 rolls. The cost per roll is $800, and the annual holding cost is 15 percent of the cost. Each order costs $50 to process.a. How many rolls should Yellow Press, Inc., order at a time?b. What is the time between orders?arrow_forwardVike Co. has a special line of mountain bikes, for which you need 7,500 handlebars per year. This component can be purchased for $45 per unit or produced in-house. The production costs are $30 per unit and the production rate is 30,000 units per year. The machine start-up cost is $165, while the ordering cost is $37.5. Consider the weekly inventory cost at 0.75%. Suppose the company allows shortages, in which Vike Co. will lose $0.25 per missing unit and a penalty of $10.5 per unit per year. Should Vike Co. buy or produce?arrow_forwardA food processor uses approximately 27,000 glass jars a month for its fruit juice products. Because of storage limitations, a lot size of 4000 jars has been used. Monthly holding cost is $0.18 per jar, and reordering cost is $60 per order. Please answer the following questions by attaching your answers in a Word or Excel document. Show all work. Round up your answers where relevant. 1. What penalty is the company incurring by its present order size. Hint: compare the cost incurred as a result of using the current order size of 4000 jars versus the cost that would be incurred as a result of using the EOQ lot size. 2. What is the number of orders per month that would be placed if the company uses the EOQ order? 3. What is the maximum number of jars that are held in inventory in a given ordering cycle using the EOQ? 4. Assume that the firm operates 30 days per month and the lead time (LT) for each order is 5 days. What is the reorder point (ROP)? Verbally interpret the meaning of this…arrow_forward
- Yellow Press, Inc., buys paper in 1,500-pound rolls for print-ing. Annual demand is 2,500 rolls. The cost per roll is $800,and the annual holding cost is 15 percent of the cost. Eachorder costs $50 to process.a. How many rolls should Yellow Press, Inc., order at a time?b. What is the time between orders?arrow_forwardTop Hatz Inc. makes a variety of ski hats. The average demand for the ‘Nordic Dream’ hat is 125 per week and production is capable of producing 500 hats per week. Set-up is $245. The value of the finished hats is $25 and the annual holding cost per item is 20% of its value. What is the production order quantity? What is the production time for each cycle? What is the average time between orders, assuming there are 350 days available per year? Top Hatz Inc.’s average demand for the ‘Nordic Dream’ hat increases to 350per week; its production capability improves to 700 hats per week; set-up cost falls to $95; and the annual holding cost per item increases to 35% of its value. What is the effect on POQ, production time for each cycle and average time between orders?arrow_forwardJoe Henry's machine shop uses 2,460 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand 2,460 Holding cost per bracket per year $ 1.65 Order cost per order $20.00 Lead time 22 days Working days per year 250 a) What is the EOQ? b) What is the average inventory if the EOQ is used? What would be the annual inventory holding cost? c) Given the EOQ, how many orders would be made each year? What would be the annual order cost? d) Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? e) What is the time between orders? f) What is the reorder point (ROP)?arrow_forward
- Bulldogs Inc. expects to use 96,000 litters of paint annually costing P12 per litter. Inventory carrying cost is equal to 25% of the purchase price. The lead time for placing the order is 1 week, and Bulldogs Inc. holds 4,800 litters of paint as safety stock. The company’s usage of inventory is at a constant rate. If the company orders 4,000 litters of paint per order, what is the cost of carrying inventory?arrow_forwardAll Seasons Flower Shop uses 870 clay pots a month. The pots are purchased at $ 6 each. Annual holding cost per pot is estimated to be 35% of purchase cost. Ordering cost is $ 40 per order. The shop operates 12 months in a year. What is the economic order quantity (EOQ)?arrow_forwardRoss White’s machine shop uses 2500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or10% of the unit cost) and the ordering cost is $18.75. There are 250 working days per year. Upon hearing that Ross White is considering the producing the brackets in-house, the supplier has notified Ross that the purchase price would drop from $15 per bracket to $14.50 per bracket if Ross purchase the brackets in lots of 1000. After analyzing the cost of the various options for obtaining the brackets, Ross White recognizes that although he knows the lead time is 2 days, the average daily demand usually varies. Ross has kept careful records and has determined that the average daily demand is normally distributed with a standard deviation of 2.5 units. If Ross would like to maintain a service level of 90 %,…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
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
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY