Question: Pleased help with questions J - S EOQ Assignment You are the company's Supply Chain Manager -- solve the below questions to ensure an optimal
Pleased help with questions J - S
| EOQ Assignment | |||||||||
| You are the company's Supply Chain Manager -- solve the below questions to ensure an optimal ordering policy. | |||||||||
| Annual requirements (R) = | 18,000 | units | |||||||
| Order cost (S) = | $68.00 | per order | 68 | ||||||
| Holding rate (k) = | 32.0% | annually | 32 | ||||||
| Unit cost (C) = | $52.87 | per unit | 52.87 | ||||||
| Lead time (LT) = | 4 | days | |||||||
| Number of days per year = | 365 | days | |||||||
| Annual Holding Cost Per Unit | $16.92 | 16.91 | |||||||
| Days in a year | 365 | ||||||||
| Compute the following: | |||||||||
| Note: You must include formulas for full credit -- do NOT simply type in answers. Add additional cells if necessary, but label each clearly! | |||||||||
| a) EOQ = | 144766.41 | units | |||||||
| EOQ (rounded to nearest whole item) | 380 | units | 0 | ||||||
| b) total purchase cost = | $951,660 | ||||||||
| c) annual holding cost = | $3,221 | ||||||||
| d) annual order cost = | $3,213 | ||||||||
| e) total annual logistics cost = | $6,434 | (without purchase cost) | |||||||
| f) reorder point | 197.26 | units (note: no variability in demand or lead-time in this situation) | |||||||
| g) number of orders placed per year = | 47.3 | orders | |||||||
| h) time between orders = | 7.7 | days | |||||||
| i) plot cost curves -- holding cost, order cost and total cost. Use the layout below the questions, if needed. | |||||||||
| j) If you are required to order by the whole case, at 50-per case, what Q would you recommend? | units | ||||||||
| k) What is the new Total Annual Logistics Cost of the Whole-Case Q? | (suggestion -- you can compute here, or just change your Q above where your EOQ is and see the resulting costs -- don't forget to undo this change to put EOQ back!) | ||||||||
| l) What is the difference in Total Annual Logistics Cost of EOQ and that of the Whole-Case Q? | |||||||||
| m) Given your answer to l above, what does this say about the EOQ Formula? | |||||||||
| n) Your CEO just announced that inventory levels must be cut by 10% in order to reduce costs (based on your original EOQ in a.). What would your new Q need to be? | units | (note: average inventory = Q/2 ) | |||||||
| o) Based on your new Q from above, you will actually raising costs unless you can change S too. What would your new S need to be in order to stay with an optimal ordering policy? | |||||||||
| p) How much must S be reduced from the current cost-per order to reach your new goal? | |||||||||
| q) List 3 specific ways in which you can lower S in order to reach your goal? | 1) | ||||||||
| 2) | |||||||||
| 3) | |||||||||
| Q | Annual Holding Cost | Annual Ordering Cost | Total Cost | ||||||
| 50 | |||||||||
| 75 | |||||||||
| 100 | |||||||||
| 125 | |||||||||
| 150 | |||||||||
| 175 | |||||||||
| 200 | |||||||||
| 225 | |||||||||
| 250 | |||||||||
| 275 | |||||||||
| 300 | |||||||||
| 325 | |||||||||
| 350 | |||||||||
| 375 | |||||||||
| 400 | |||||||||
| 425 | |||||||||
| 450 | |||||||||
| 475 | |||||||||
| 500 | |||||||||
| 525 | |||||||||
| 550 | |||||||||
| 575 | |||||||||
| 600 | |||||||||
| 625 | |||||||||
| 650 | |||||||||
| 675 | |||||||||
| 700 | |||||||||
| 725 | |||||||||
| 750 | |||||||||
| 775 | |||||||||
| 800 | |||||||||
| 825 | |||||||||
| 850 | |||||||||
| 875 | |||||||||
| 900 | |||||||||
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