Operations management EN 24/25
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A company operating under an EOQ policy enjoys rising annual demand for their products for three consecutive years. During this time their holding cost and ordering cost remain constant. Which statement is best?
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Consider the following data for an independent-demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop: Weekly demand = 50 units. Ordering cost = $8/order. Holding cost = $4/unit/year. Weeks in a year = 50. Due to new ordering procedures initiated by Crittenden, the ordering cost is dropping to $4 per order. At the same time, the weekly demand increases to 64 units per week due to an increase in business. What effect do these changes have on the EOQ quantity for this item?
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A company deviates from the EOQ policy and decides to order on a fixed monthly schedule. Given the following characteristics: Annual demand = 48,000 units; Ordering cost = $60/order; Annual holding cost = $2 per unit/year; Operating days per year = 240 days; and the EOQ (calculated by the standard formula) is 800 units, what is the cycle time in days when ordering monthly and how does it compare to the EOQ cycle time?
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Steven Robert, owner and operator of the Earplug Superstore, is reviewing the costs associated with the store’s best-selling hearing aid, the BZ15. The data available to Mr. Robert concerning this device follow. Demand = 25 units/week. Order cost = $3/order. Holding cost = $1.50/unit/year. The Earplug Superstore operates 52 weeks a year. If Steven decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost?
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An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system or a P system (periodic review system answers these questions?
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The Schubert Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the “Smooth Shifter”, is used for the two most expensive of Schubert’s four models, and has an estimated annual demand of 300 units. Schubert estimates the cost to place an order is $40, and the holding cost for each assembly is $60 per year. The company operates 250 days per year. What is the economic order quantity for the Smooth Shifter?
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A manufacturer operates 250 days per year and faces an annual demand of 20,000 units. If the EOQ for this product is calculated to be 500 units, what is the cycle time (the time between orders) in days?
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Consider the following data for an independent-demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop: Weekly demand = 50 units. Ordering cost = $8/order. Holding cost = $4/unit/year. Weeks in a year = 50. If Crittenden uses the EOQ model, What is the time between placements of orders?
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The Schubert Company is a small manufacturing company that uses gear assemblies to produce four different models of mountain bikes. One of these gear assemblies, the “Smooth Shifter”, is used for the two most expensive of Schubert’s four models, and has an estimated annual demand of 300 units. Schubert estimates the cost to place an order is $40, and the holding cost for each assembly is $60 per year. The company operates 250 days per year. The purchasing manager decides that, in order to save purchasing time, orders for the Smooth Shifter will be placed once a month, or twelve times per year. How much does this approach cost Schubert in total annual holding and ordering costs (instead of Schubert ordering using the EOQ quantity?
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What is generally true about the class B Stock-Keeping units (SKUs) in ABC analysis? They represent:
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