Chapter 12 (pp. 520–521): Problems 12.1, 12.9, and 12.15
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Get it written →Chapter 12 (pp. 520–521): Problems 12.1, 12.9, and 12.15
12.1 L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company’s manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system?
L. Houts Plastics’ Charlotte Inventory Levels
Item Code # Average Inventory (Units) Value ($/Unit)
1289 400 3.75
2347 300 4.00
2349 120 2.50
2363 75 1.50
2394 60 1.75
2395 30 2.00
6782 20 1.15
7844 12 2.05
8210 8 1.80
8310 7 2.00
9111 6 3.00
12.9 Henry Crouch’s law office has traditionally ordered ink refills 60 units at a time. The firm estimates that carrying cost is 40% of the $10 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ model are thought to apply.
a. For what value of ordering cost would its action be optimal?
b. If the true ordering cost turns out to be much greater than your answer to (a), what is the impact on the firm’s ordering policy?
12.15 Joe Henry’s machine shop uses 2,500 brackets during the course of a 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
A) Given the above information, what would be the economic order quantity (EOQ)?
B) Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost?
C) Given the EOQ, how many orders would be made each year? What would be the annual order cost?
D) Given the EOQ, what is the total annual cost of managing the inventory?
E) What is the time between orders?
F) What is the reorder point (ROP)?
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