Concept explainers
a)
Interpretation: Compare the cost the policy obtained by heuristic lot-sizing method for the given example that obtained using EOQ.
Concept Introduction: Heuristic lot-sizing method is one of the Economic order Quantity(EOQ) model. The main aim of this method is that product demand may vary over the time.it is also called generalization of the inventory theory model.it will determine the economic lot size by order cost.
b)
Interpretation: Determine the advantages of the POQ approach over EOQ.
Concept Introduction: EOQ (Economic Order Quantity) defines that products are produced with the perfect quality making the cost of production based on the demand.POQ (Production Order Quantity) defines that demand is the increasingly function of the time and rate of production is proportional to the demand.
c)
Interpretation: Discuss about POQ method will be more cost effective in general than heuristic methods.
Concept Introduction: POQ (Production Order Quantity) is one of the free template to determine the production volume of the every production for goods with the demand. Through POQ, goods and materials will shipping in more at the time.
d)
Interpretation: Solve the given problem using POQ method and compare the total holding and set up cost with that obtained by the other methods.
Concept Introduction: One of the model is POQ is that quantity of the goods to be produced and when to order that produced goods are under the aim of the POQ.it is mainly used for Products produced time and sold to same time.
e)
Interpretation: Solve the given problem using POQ method and compare the total holding and set up cost with that obtained by the other methods.
Concept Introduction: In POQ model, each and every product will be produced only after the order placed by the company to the suppliers.POQ will be calculated by minimizing the total cost per order by obtaining the derivation of the first order to empty (Zero).
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Production and Operations Analysis, Seventh Edition
- The difference(s) between the basic EOQ model and the pro-duction order quantity model is (are) that: a) the production order quantity model does not require theassumption of known, constant demand.b) the EOQ model does not require the assumption ofnegligible lead time.c) the production order quantity model does not require theassumption of instantaneous delivery.d) all of the above.arrow_forward[item no. 11] In a single period inventory model, the demand is assumed to follow a normal distribution. The value of ML/(ML+MP) is 0.6. The company used marginal analysis with the normal distribution to determine the optimal stocking level X*. If the mean demand is 100, then X* a. is less than 100 b. is equal to 100 c. cannot be determined from the information given d. is greater than 100arrow_forwardThe difference(s) between the basic EOQ model and theproduction order quantity model is(are) that:a) the production order quantity model does not requirethe assumption of known, constant demand.b) the EOQ model does not require the assumption ofnegligible lead time.c) the production order quantity model does not requirethe assumption of instantaneous delivery.d) all of the above.arrow_forward
- Reorder PointConsider an economic order quantity case where annual demand D = 1,000 units, economic order quantity Q = 200 units, the desired probability of not stocking out P = .95, the standard deviation of demand during lead time σL = 25 units, and lead time L = 15 days. Determine the reorder point. Assume that demand is over a 250-workday year.arrow_forwardThe primary objective in determining the Economic Order Quantity (EOQ) for an item is to: O minimize the quantity of the item ordered from the supplier each time. O minimize the annual total inventory cost for that item. order the item from a supplier located in close proximity. O maximize the time between orders. O find a quick and easy way to answ dependent or independent. the lot sizing question, regardless of whether the demand for the item isarrow_forwarda school consumes liquid detergent annually. see related info, below: D = 408 gallons per year S = $20 H = $15 per gallon range price 1 to 179 $40 180 to 249 37.25 250 or more 37.19 A. initial EOQ (common minimum) is _____ (round up) B. total cost (at initial EOQ) is ___ (2 decimals) C. overall optimal order quantity is ___ show solutionsarrow_forward
- 27- In the economic order quantity model, the optimal quantity (EOQ) is always A. Less than the maximum inventory B. The same as the average inventory C. Greater than the maximum inventory D. The same as the maximum inventoryarrow_forwardThe store wants to determine the Economic Order Size (EOQ) and Total Inventory Cost for this brand of carpet given an estimated annual demand of 10,000 yards of carpet, an annual carrying cost of P 37.50 per yard, and an ordering cost of P 7,500.00. The store would also like to know the number of orders that will be made annually and the time between orders (i.e., the order cycle), given that the store is open every day except 52 Sundays, Philippine Independence Day, New Year, and Christmas Day (which are assumed to fall not on Sundays) A. Using the computed optimal order size or EOQ, determine the optimum Total Cost. C. Determine the Order Cycle Timearrow_forwardSolve the newsperson problem. Probability 0.11 0.08 0.22 0.26 0.12 0.21 Value 1 2 3 4 5 6 Purchase cost c = 27 Selling price p = 35 Salvage value v = 15 What is the optimal order quantity?arrow_forward
- In economic order quantity EOQ model, manimum level of inventory is a. the same as the level of inventory at the time of placing an order b. EOQ c. Recorder point plus EOQ d. None of the answers e. EOQ minus recoder pointarrow_forward53. Average demand for a particular item is 1,200 units per year. It costs $100 to place an ordem for this item, and it costs $24 to hold one unit of this item in inventory for one year. If the fixed order-interval model is chosen in this instance, how often (on average) will this item be ordered a) Once a month b) Once every other month c) Twice a month d) Twice every three months e) Three times every two months 54. The EOQ model is most relevant for which one of the following? a) Ordering items with dependent demand b) Determination of safety stock c) Ordering perishable items d) Determining fixed interval ordering quantity e) Determining fixed order quantity 55. What type of process would a paper mill be most likely to use? a) Continuous flow b) Project c) Job shop d) Flow shop 56. The transportation model method that is used to evaluate location alternatives minimizes t a) sources b) destinations c) capacity d) shipping costsarrow_forwardProblem 20-39 (Algo) CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price-break and other data for the problem: Price of copper 0.80 per pound up to 2,499 pounds 0.79 per pound for orders between 2,500 and 4,999 pounds %24 0.77 per pound for orders 5,000 pounds or greater 51,000 pounds per year 30 percent per unit per year of the price of the copper Annual demand Holding cost Ordering cost 30 Which quantity should be ordered? Quantity poundsarrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,