A company can produce a part it uses in an assembly operation at the rate of 50 an hour. The companyoperates eight hours a day, 300 days a year. Daily usage of the part is 300 parts and the company uses thepart every operating day. The current batch size is 6,000 parts. The annual holding cost is $2 per unit, andsetup cost is $100. Q4.1. How many batches (production runs)will be produced in a year?Q4.2. While production is occurring, how many parts per day are being addedto inventory (Inventory is built up at what rate (units per day)?Q4.3. What average inventory being held?

Economic run quantity or Economic production quantity (EPQ) is the optimal quantity that a company…

Answered: A company can produce a part it uses in…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Scouts Corp. projects its sales to be 1,000 units this year. As a result of holding inventories, insurance, storage, taxes and other cost are incurred amounted to P2 per unit per year. Every time Scouts Corp. makes an order, P10 is incurred. On the average it takes 3 days to make and receive an order. (Use 360 days a year). Assuming Scouts Corp.’s inventory may take as 5 days to respond, how many units of inventory is the average daily usage? and what is the normal lead time usage?
XYZ has developed the following data from its Material A Safety stock 280 Average (normally) daily use 200 Maximum daily use 240 Minimum daily use 180 EOQ 1,000 Cost of placing an order P20 Working days per year 250 days Lead time 6 days What is the reorder point? What is the absolute maximum inventory? What is the normal maximum inventory? What is the cost of carrying an inventory per unit per year? What is the cost of carrying an inventory per unit per year?
A product is produced in batches. Batch size = 2000 units. Annual demand = 50,000 units, and unit cost of the product = $4.00. Setup time to run a batch = 2.5 hr, cost of downtime on the affected equipment is figured at $250/hr, and annual holding cost rate = 30%. What would the annual savings be if the product were produced in the economic order quantity?
An insurance company has custom envelopes printed for correspondence with its clients. It uses 780 boxes of envelopes annually at a steady rate. It costs $285 for delivery and processing (in addition to the printing costs) each time the company places an order, and it costs $2 per box for annual storage. To minimize costs, how many boxes of envelopes should the company order?
A certain piece of production equipment is used to produce various components for an assembled product of the XYZ Company. To keep in-process inventories low, it is desired to produce the components in batch sizes of 150 units (daily requirements for assembly). Demand for each product is 2500 units per year. Production downtime costs an estimated $200/hr. All of the components made on the equipment are of approximately equal value: Cp = $9.00/unit. Holding cost rate = 30%/yr. In how many minutes must the changeover (setup) between batches be completed in order for 100 units to be the economic order quantity?
EE Co has calculated the following in relation to its inventories.Buffer inventory level 60 unitsReorder size 250 itemsFixed order costs $40 per orderCost of holding onto one item pa $1.5 per yearAnnual demand 10,000 itemsPurchase price $2 per itemWhat is the total inventory related costs for a year (to the nearest whole $)?
YOZECH Enterprise is frequently losing sales due to stock-outs. To avoid this problem, the owner likes to implement a new system of maintaining an inventory level which will include a safety stock. After looking into the past records of the company, it was determined that the normal usage during the lead time of 12 days is 120 units while the maximum usage is 150 units for 15 days. Based on the given information, what should be the safety stock of YOZECH Enterprise? What is the ROP (Re-order point)?
The demand for a particular part called SKU 005 is 1,200 units a year. The cost of one SKU 005 is $40.00. It costs $60.00 to place an order SKU 005, and the user of SKU 005 has a per year inventory carrying cost of 25% of unit cost. Assume that there are 250 working days in the year where SKU 005 is used. Once the purchasing manager for SKU 005 places an order, it always takes the vendor 5 working days to deliver that order. What should the purchasing manager's reorder point be? O A. 24 O B. 36 O C. 30 O D. 5 O E. 12
3) A company produces a part that is used in its production process. The company produces the part at a rate of 300 units per day. The daily demand for the product is 180 units. The annual demand for the part is 54,000 units and occurs consistently over the 300 days that the company operates yearly. The company incurs a setup cost of $300 each time the item is produced. The cost of carrying the item in inventory is estimated to be 25 percent of the item's $100 cost. How many units should the company produce each production run to minimize its inventory- associated costs?
A manufacturer’s annual demand is 6000 units. The current units per order is $100. The setup cost is $50 per order and the holding cost is $7 per unit. The cost per unit is $2.50. The Number of work days is 250 per year. What is the annual setup cost? What is the annual holding cost? What is the optimal order quantity (EOQ)? Using the EOQ, how many orders should be placed per year? What is the interval between orders? What is the inventory administration cost? What is the total cost of inventory?
Ashlee’s Beach Chairs Company produces upscale beach chairs. Annual demand for the chairs is estimated at 18,000 units. The frames are made in batches before the final assembly process. Ashlee’s finalassembly department needs frames at a rate of 1500 per month. Ashlee’s frame department can produce2500 frames per month. The setup cost is $800, and the annual holding cost is $18 per unit. The company operates 20 days per month. Lead time is 5 days. Determine the optimal order quantity, the totalannual costs, and the reorder point.
A company has a daily demand is 85 units and daily production is 120 units, Co = $70 and Cc = $10 per unit per year. What is the maximum inventory level? (Assume that the facility is open 365 days per year.) 1220 610 489 356

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