Prob 4: Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation will require 2000 components per month throughout the year (24,000 units annually). Assume that the ordering costs are $20 per order, the unit cost is $2.50 per component, and annual holding costs are 25% of the value of the inventory. Westside has 250 working days per year and a lead time of 4 days. Current production line has an annual capacity of 30,000 units. Answer the following inventory policy questions: a. Rewrite the inputs using standard notations (D, Co, Ch, ...) b. What is the reorder point? c. What is the cycle time? d. What are the optimal order quantity and the total annual cost? e. Calculate the optimal production lot size.

Prob 4: Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation will require 2000 components per month throughout the year (24,000 units annually). Assume that the ordering costs are $20 per order, the unit cost is $2.50 per component, and annual holding costs are 25% of the value of the inventory. Westside has 250 working days per year and a lead time of 4 days. Current production line has an annual capacity of 30,000 units. Answer the following inventory policy questions: a. Rewrite the inputs using standard notations (D, Co, Ch, ...) b. What is the reorder point? c. What is the cycle time? d. What are the optimal order quantity and the total annual cost? e. Calculate the optimal production lot size.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
4. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside's generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per com- ponent, and annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: a. What is the EOQ for this component? b. What is the reorder point? C. What is the cycle time? d. What are the total annual holding and ordering costs associated with your recom- mended EOQ? 5. Suppose that Westside's management in Problem 4 likes the operational efficiency of or- dering once each month and in quantities of 1000 units. How much more expensive would this policy be than your EOQ recommendation? Would you recommend in favor of the…
Westside Auto purchases a component used in the manufacturing of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1,000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Eastside has 250 working days per year and a lead time of 10 days. a) What is the EOQ for this component? b) What is the cycle time? c)
)Haulsee Inc. builds 800,000 golf carts a year and purchases the electronic motors for these carts for $370 each. Ordering costs are $540, and Haulsee's inventory carrying costs average 14% of the inventory value. What is the EOQ for Haulsee? d) Alpha Products maintains a capital structure of 40% debt and 60% common equity. To finance its capital budget for next year, the firm will sell $50 million of 11% debentures at par and finance the balance of its $125 million capital budget with retained earnings. Next year Alpha expects net income to grow 7% to $140
Northside Auto purchases a component used in the manufacturing of auto-bile generators directly from the supplier. Eastside’s generator production operation, which is operated at a constant rate, will require 1,000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% ofthe value of the inventory. Eastside has 250 working days per year and a lead timeof 10 days. a. What is the EOQ for this component?b. What is the cycle time?c. What is the reorder point? *Please solve for a-c. Neatly write all your work/steps on paper, NO EXCEL* thank you!
5.Demand for fasteners Aw.w. Grainger is 20,000 boxes per month. The holding cost at Grainger is 20% per year. Each order incurs a fixed cost of $400. The supplier offers an all unit discount pricing scheme with a price of $5per box for order under 30,000 and a price of $4.90for all orders of 30,000 or more. How many boxes should Grainger order per replenishment?
Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and the annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: What is the EOQ for this component? What is the reorder point? What are the total annual holding and ordering costs associated with your recommended EOQ?
Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Westside’s generator production operation, which is operated at a constant rate, will require 1000 components per month throughout the year (12,000 units annually). Assume that the ordering costs are $25 per order, the unit cost is $2.50 per component, and the annual holding costs are 20% of the value of the inventory. Westside has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: a. What is the EOQ for this component? b. What is the reorder point? c. What are the total annual holding and ordering costs associated with your recommended EOQ?
Describe what is safety stock and what it provides safety against in inventory management ?
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays set up cost equal to $20 for each battery and estimates that the annual holding cost is $8.4. The working days for the company are 300 days per year Determine the economic order quantity (EOQ). b. How many orders will be placed per year using the EOQ? c. What is the expected time between orders? d. Determine the ordering, holding, and total inventory costs for the EOQ
The Ambrosia Bakery makes cakes for freezing and subse-quent sale. The bakery, which operates five days a week, 52 weeks a year, can produce cakes at the rate of 116 cakesper day. The bakery sets up the cake-production operationand produces until a predetermined number (Q) have beenproduced. When not producing cakes, the bakery uses itspersonnel and facilities for producing other bakery items.The setup cost for a production run of cakes is $700. Thecost of holding frozen cakes in storage is $9 per cake per year. The annual demand for frozen cakes, which is con-stant over time, is 6000 cakes. Determine the following: a. Optimal production run quantity (Q)b. Total annual inventory costsc. Optimal number of production runs per yeard. Optimal cycle time (time between run starts)e. Run length in working days
Antique manufactures old-fashioned telephones for use in movie scenes (and other displays). Antique's annual demand for rotary telephones is 33,000 units per year, so it needs just as many receptors to assemble the phones. Receptors are ordered from a supplier, and shipping and handling costs are $15 per order (regardless of how many units are on order). The holding costs are $7/unit/year. If the current company policy calls for orders of 3,000 receptors, what are the total annual inventory costs for the receptors? round your final answer to the nearest whole dollar.