Solve the Problem and verify your answers using the Excel Software

Analyze and comment for each problem Inventory carrying Cost, Ordering Cost and total Cost for, Take snap shot for all the cases

• Order Quantity Q less than EPQ (at least 2 points)

• Order Quantity Q greater than EPQ (at least 2 points)

PROBLEM-1 EPQ Analysis

D = 18,000/year, S = $100, H = $40 per unit per year, p = 120 units per day, and u = 90 units/day. Find the economic production quantity (EPQ) (round to an integer value).

Do the sensitivity Analysis using the Excel template with Production quantity more than EPQ and Less than EPQ

Problem-2

A firm produces 250,000 each world class footballs for both domestic and international markets. It can make footballs at a rate of 2000 per day. The footballs are manufactured uniformly over the

whole year. Carrying cost is Rs. 100 per football and Setup cost for a production run is Rs. 2500. The manufacturing unit operates for 250 days per year. Determine the 1. Optimal Run Size.

2. Minimum total annual cost for carrying and setup cost.

Problem-3.

Assembly takes place 5 days a week, 50 weeks a year. It will take a full day to get the machine ready for a production run of the component for the new product.

S = $300 H = $10.00 p = 200/day u = 80/day

D** = 20,000 (250 days * 80/day) Note: Round Qp to an integer value, but round any other values to a maximum of two decimals. Evaluate the effect of changing Production Quantity on either side of EPQ and analyze the effect and give your observations