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Jordin Henry’s machine shop uses 2,500 brackets during the course of a year.
The full instructions are attached. Note: [PX] means the problem may be solved with POM for Windows and/or Excel OM.
Dots next to the question numbers indicate difficulty level of the questions: 1 dot for easy, 2 dots for moderate, and 3 dots for difficult.
Problem#1
Jordin 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:
a. Given the 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)? [PX]
Problem#2
Radovilsky Manufacturing Company, in Hayward, California, 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.
a. What is the optimal size of the production run?
b. What is the average holding cost per year?
c. What is the average setup cost per year?
d. What is the total cost per year, including the cost of the lights? [PX]
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