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Operations Management: Processes And Supply Chains (12th Global Edition) - Does Not Include Mylab Operations Management
12th Edition
ISBN: 9780134890357
Author: Lee J. Krajewski, Manoj K. Malhotra
Publisher: Pearson Global Edition
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Chapter C, Problem 7P
Summary Introduction
Interpretation: The best order quantity is to be calculated.
Concept Introduction: Specific quantity of an item to be delivered at a specific date is lot size. Ordering optimum size (creating no additional or shortage of materials in stock) at minimum ordering cost is EOQ.
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Students have asked these similar questions
The purchasing agent for a company that assembles and sells air-conditioning equipment in a Latin American country noted that the cost of compressors has increased significantly each time they have been reordered. The company uses an EOQ model to determine order size. What are the implications of this price escalation with respect to order size? What factors other than price must be taken into consideration?
The sales of Whole Care mouthwash at Jen's of Michigan over the past six months have averaged 2,000 cases per month, which is the current order quantity. Jen's of Michigan's cost is $12.00 per case, and ordering cost is $38. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of the item cost. Lead time is 3 days, and considering weekends and holidays, Tom's of Maine operates 250 days per year.
Based on the above information please answer the following questions
What is EOQ?
What is the cost reduction?
What is the reorder point?
What is Time between Orders (TBO)?
Daily demand for product sample kits is normally distributed with a mean of 35 units and a standard deviation of 4. Supply is virtually certain with a lead time of 9 days. The cost of placing an order is $20, and annual carrying costs for one kit is 25 percent. The price of one kit is $12.50. Assume a year has 365 days.If a 99% service level is desired, what is average inventory on hand?
If demand had no variation, what would the reorder point be?
Chapter C Solutions
Operations Management: Processes And Supply Chains (12th Global Edition) - Does Not Include Mylab Operations Management
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