Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 8.2, Problem 10P
Summary Introduction
Interpretation:The MRP calculation for the valves is to be determined.
Concept Introduction:
The optimal order policy is known as economic order quantity (EOQ) which is used to order the different quantities in such way that minimizes the holding cost and ordering cost.
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Basic EOQ Model
Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about
2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of
capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The
company operates 360 days per year and Item X is received 9 days after placement of order.
Including its total annual purchasing cost, how much would be Item X's total
annual inventory cost? *
None of the above
O Php 2,016,971
O Php 2,008,485
O Php 2,000,000
6. The demand for a particular part called SKU 005 is 1,500 units a year. The cost of one SKU 005 is
$40.00. It costs $50.00 to place an order for SKU 005, and the user of SKU 005 has a per year
inventory carrying cost of 25% of unit cost. Assume 250 working days in the year where SKU 005
is used. (Noteshaper: Scenario #26)
а.
What is the combined annual holding and ordering cost of an order size of 200 units for
SKU 005?
b.
How many of SKU 005 should be ordered, to minimize combined ordering and holding
costs?
c. The vendor who sells SKU 005 has just offered a 5% discount for orders of 500 or more.
Now how many should be ordered?
d. Once the purchasing manager for SKU 005 places an order, the vendor requires 7
working days to deliver that order. What should be the purchasing manager's reorder
point?
Basic EOQ Model
Item X is a standard item stocked in a company's inventory of spare parts. Each year, the firm uses about
2,000 units of Item X, which costs Php 1,000 per unit. Storage costs, which include insurance and cost of
capital, amount to 18 percent of item unit cost. Placing an order for more of Item X costs Php 400. The
company operates 360 days per year and Item X is received 9 days after placement of order.
When should Item X be ordered? *
Whenever Item X's inventory level drops to 50 units
O Every 9 days
Every 50 days
50 times a year
How much would be Item X's total annual procurement cost? *
Chapter 8 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 8.1 - Prob. 1PCh. 8.1 - Prob. 2PCh. 8.1 - Prob. 3PCh. 8.1 - Prob. 4PCh. 8.1 - Prob. 5PCh. 8.1 - Prob. 6PCh. 8.1 - Prob. 7PCh. 8.1 - Prob. 8PCh. 8.1 - Prob. 9PCh. 8.2 - Prob. 10P
Ch. 8.2 - Prob. 11PCh. 8.2 - Prob. 12PCh. 8.2 - Prob. 13PCh. 8.2 - Prob. 14PCh. 8.2 - Prob. 15PCh. 8.2 - Prob. 16PCh. 8.2 - Prob. 17PCh. 8.2 - Prob. 18PCh. 8.2 - Prob. 19PCh. 8.2 - Prob. 20PCh. 8.2 - Prob. 21PCh. 8.2 - Prob. 22PCh. 8.3 - Prob. 23PCh. 8.3 - Prob. 24PCh. 8.3 - Prob. 25PCh. 8.4 - Prob. 26PCh. 8.4 - Prob. 27PCh. 8.4 - Prob. 28PCh. 8.4 - Prob. 29PCh. 8.5 - Prob. 30PCh. 8.5 - Prob. 31PCh. 8.5 - Prob. 32PCh. 8.5 - Prob. 33PCh. 8.5 - Prob. 34PCh. 8.6 - Prob. 35PCh. 8.6 - Prob. 36PCh. 8.6 - Prob. 37PCh. 8.6 - Prob. 38PCh. 8.6 - Prob. 39PCh. 8.6 - Prob. 40PCh. 8 - Prob. 41APCh. 8 - Prob. 42APCh. 8 - Prob. 43APCh. 8 - Prob. 44APCh. 8 - Prob. 45APCh. 8 - Prob. 46APCh. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51AP
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- Which of the following is the planned order receipts using an MRP program with lot-for-lot policy if the inventory on hand is 0, scheduled receipts are 150, and gross requirements are 200? Now what about if the policy is EOQ = 500?arrow_forwardWhich of the following is not an acceptable method of applying the LCNRV? Select one: a. Group inventory items b. Individual item c. Total of the inventory d. Inventory locationarrow_forwardSemans is a manufacturer that produces bracket assemblies. Demand for bracket assemblies (X) is 131 units. The following is in indented form: ITEM DESCRIPTION Bracket assembly Wall board USAGE 1 A 4 Hanger subassembly Hanger casting Ceramic knob Rivet head screw Metal tong Plastic cap E G 2 Below is a table indicating current inventory levels: Item Inventory A B E G 23 18 55 25 200 170 1,100 90 b. What are the net requirements of each item in the MPS? (Leave no cells blank be certain to enter "0" wherever requirec Item Net Requirements A F Nevtarrow_forward
- Production Company Universal Controlsmanufactures control units. Their new models areeI Argon I and eI Argon II. To make each unit ofArgon I, use 6 meters and 3 controllers. For fa-craft each unit of Argon II, they use 10 meters and Scontrollers. The company receives a total of 760 me-managers and daily controllers of their suppliers.How many units of each model can you produce?seriously? Assume that all parts are used. Note: Solve freely # OF ARGON UNITS I # OF ARGON UNITS IIarrow_forwardThe ROP is an important input in determining the EOQ. True Falsearrow_forwardA local outdoor vegetable stand has exactly 1,000 square feet of space to displaythree vegetables: tomatoes, lettuce, and zucchini. The appropriate data for theseitems are given in the following table.ItemTomatoes Lettuce ZucchiniAnnual demand 850 1,280 630(in pounds)Cost per pound $0.29 $0.45 $0.25The setup cost for replenishment of the vegetables is $100 in each case, and thespace consumed by each vegetable is proportional to its costs, with tomatoes requiring 0.5 square foot per pound. The annual interest rate used for computingholding costs is 25 percent. What are the optimal quantities that should be purchased of these three vegetables?arrow_forward
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