Homework Assignment Four

12.3

Joe Henry’s machine shop uses 2,500 brackets during the course of the year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets.

Annual demand: 2,500

Holding cost per bracket per year $ 1.50

Order cost per order: $18.75

Lead Time: 2 days

Working days per year: 250

1. Given the above information, what would be the economic order quantity(EOQ)
2. Given the EOQ, what would be the average inventory?
3. Given the EOQ, how many orders would be made each year? What would be the annual order cost
4. Given the EOQ, what is the total annual inventory cost?
5. What is the time between orders
6. What is the reorder point (ROP)

12.17

Radovilsky Manufacturing Company, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $50. The cost of each light is $1. The holding cost is $0.10 per light per year.

1. What is the optimal size of the production run?
2. What is the average holding cost per year?
3. What is the average setup cost per year?
4. What is the total cost per year, including the cost of the lights?
5. What is the maximum number of lights that will be in inventory?
6. How many production runs of lights will the company have in a year?

12.26

Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidty can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order cost to be $50 per order. The cost schedules of two suppliers are as follows:

Vendor 1 Vendor 2

Quantity Price/LB Quality Price/LB

1. 499 $17.00 1-399 $17.10

500-999 $16.75 400-799 $16.85

1000+ $16.50 800-1199 $16.60

1,200+ $16.25

1. What is the economic order quantity for both suppliers?
2. What quantity should be ordered and which supplier should be used
3. What is the total cost for the most economic order size?

Price: $11.4

Solution: The downloadable solution consists of 6 pages, 540 words.
Deliverable: Word Document