Tarleton State University - ENGT 4336Ch5 Fundamentals-of-production-Control-and-planning-Stephan-N-Chapman.>Chapter 5 - Inventory Management DISCUSSION QUESTIONS AND PROBLEMS

Document Content and Description Below

Chapter 5 - Inventory Management DISCUSSION QUESTIONS AND PROBLEMS 1. The basic reorder point assumes you will order as soon as you reach the reorder point. What happens if the item is only one of ... several that is ordered from the same supplier. Discuss how joint replenishment from a single supplier might alter your inventory model. Some of the issues using a single supplier would include shipping costs, ordering costs and the supplier's reliability. Do you get a discount on ordering or shipping? Do you have to order items at one time? 2. Describe the type of inventory policy you might find in each of the following operations, and describe why – a hospital, a cafeteria, an automobile repair facility, a bakery, and a dental office. Hospital – Independent demand inventory – hospital really doesn’t/can’t plan for most things – you can use stats to determine which types of procedures/cases are the most frequent and any common supplies or items used and order accordingly with a safety stock . Cafeteria – Dependent demand inventory with a cycle inventory (FIFO) – food spoils. Automobile repair facility – Independent demand inventory – with some level of safety stock One item that may be unique is the recall process with that in place (assuming this is a OEM repair facility) – you can also use an anticipation inventory. Bakery is similar to the cafeteria unless this is a commercial facility then a dependent demand inventory with both a cycle and anticipation inventory system. Dental Office is similar to the hospital – but with less safety stock. Each of these will need some level of raw materials, WIP, MRO stock. Finished goods inventory may be found in the cafeteria and the bakery. 3. One of the products stocked by Joe's Club is JoesCola, which is sold in cases. The demand level for JoesCola is highly seasonal.  During the slow season, the demand rate is approximately 650 cases a month, which is the same as a yearly demand rate of 650*12 = 7800 cases. 1 This study source was downloaded by 100000823404380 from CourseHero.com on 04-14-2021 04:09:12 GMT -05:00 https://www.coursehero.com/file/27126997/Ch5-Fundamentals-of-production-Control-and-planning-Stephan-N-Chapmandoc/ This study resource was shared via CourseHero.com During the busy season, the demand rate is approximately 1300 cases a month, or 15,600 cases a year.  The cost to place an order is $5, and the yearly holding cost for a case of JoesCola is $12. (a) According to the EOQ formula, how many cases of JoesCola should be ordered at a time during the slow season? How many cases of JoesCola should be ordered during the busy season? Slow season Economic Order Quantity 81 Annual Costs based on EOQ Orders per Year 97 Annual Ordering Cost $484 Annual Holding Cost $484 Annual Inventory Cost $968 Busy season Economic Order Quantity 114 Annual Costs based on EOQ Orders per Year 136.84 Annual Ordering Cost $684 Annual Holding Cost $684 Annual Inventory Cost $1,368 (b) Suppose Joe's Club decides to use the same order quantity throughout the year, resulting in an order quantity of 150 units. Calculate total holding and ordering costs for the year. Do not consider safety stock in your calculations. To do your calculations, annual demand can be calculated as an average of the slow and busy rates given above. Parameters Current Lot Size (Q) 150 [Show More]

Last updated: 1 year ago

Preview 1 out of 9 pages