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Chapter 13 Homework Solution

This document provides solutions to inventory management homework problems involving calculating order quantities, total costs, production schedules, and maximum inventory levels. Key points: - Problem 1 calculates the economic order quantity and total cost for an item with given demand, ordering cost, and holding cost. - Problem 2 does the same for a different item, and shows the order quantity is acceptable if slightly higher. - Problem 3 calculates order quantity, total cost, and savings from a higher holding cost for pots with given demand and costs. - Problem 4 calculates order quantity, number of orders per year, run length, and verifies a different quantity is acceptable for packages. - Problems 5-10 provide additional examples of calculating order quantities,

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Ahmed
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111 views

Chapter 13 Homework Solution

This document provides solutions to inventory management homework problems involving calculating order quantities, total costs, production schedules, and maximum inventory levels. Key points: - Problem 1 calculates the economic order quantity and total cost for an item with given demand, ordering cost, and holding cost. - Problem 2 does the same for a different item, and shows the order quantity is acceptable if slightly higher. - Problem 3 calculates order quantity, total cost, and savings from a higher holding cost for pots with given demand and costs. - Problem 4 calculates order quantity, number of orders per year, run length, and verifies a different quantity is acceptable for packages. - Problems 5-10 provide additional examples of calculating order quantities,

Uploaded by

Ahmed
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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CHAPTER 13 INVENTORY MANAGEMENT

Homework Solution
3.

D = 1,215 bags/yr.
S = $10
H = $75
a.

2 DS

2(1,215)10
18 bags
75

b. Q/2 = 18/2 = 9 bags


c.

D
1,215 bags

67.5 orders
Q 18 bags / orders
TC Q / 2H

d.

D
S
Q

18
1,215
(75)
(10) 675 675 $1,350
2
18

e. Assuming that holding cost per bag increases by $9/bag/year


Q=

2(1,215)(10)
17 bags
84

TC

17
1,215
(84)
(10) 714 714.71 $1,428.71
2
17

Increase by [$1,428.71 $1,350] = $78.71


4.

D = 40/day x 260 days/yr. = 10,400 packages


S = $60 H = $30
a.

Q0

2DS

b.

TC

Q
D
H S
2
Q

2(10,400)60
203.96 204 boxes
30

204
10,400
(30)
(60) 3,060 3,058.82 $6,118 .82
2
204

c. Yes
d.

TC 200

200
10,400
(30)
(60)
2
200

TC200 = 3,000 + 3,120 = $6,120


6,120 6,118.82 (only $1.18 higher than with EOQ, so 200 is acceptable.)
5.

D = 750 pots/mo. x 12 mo./yr. = 9,000 pots/yr.

Price = $2/pot S = $20 H = ($2)(.30) = $.60/unit/year


a.

2DS

Q0

2(9,000) 20
774.60 775
.60

774.6
9,000
(.60)
(20)
2
774.6

TC

TC = 232.35 + 232.36
= 464.71
If Q = 1500

TC

1,500
9,000
(.6)
( 20)
2
1,500

TC = 450 + 120 = $570


Therefore the additional cost of staying with the order size of 1,500 is:
$570 $464.71 = $105.29
b.
9.

Only about one half of the storage space would be needed.

p = 5,000 hotdogs/day
u = 250 hotdogs/day

D= 250/day x 300 days/yr. = 75,000 hotdogs/yr.

300 days per year


S = $66
H = $.45/hotdog per yr.
a.

2DS
H

Q0

pu

2(75,000)66
.45

5,000
4,812.27 [round to 4,812]
4,750

b. D/Qo = 75,000/4,812 = 15.59, or about 16 runs/yr.


c. run length: Qo/p = 4,812/5,000 = .96 days, or approximately 1 day
10.

p = 50/ton/day
u = 20 tons/day

D= 20 tons/day x 200 days/yr. = 4,000 tons/yr.

200 days/yr.
S = $100
H = $5/ton per yr.
a.

Q0

2DS
H

pu

2(4,000)100
5

50
516.40 tons [10,328 bags]
50 20

b.

I max

Q
516.4
(p u )
(30) 309.84 tons [approx. 6,196.8 bags]
P
50

I max 309.48
:
154.92 tons [approx. 3,098 bags]
2
2

Average is

c. Run length =

Q 516.4

10.33 days
P
50

d. Runs per year:

D
4,000

7.75 [approx. 8]
Q
516.4

e. Q = 258.2
TC =

I max
D
H S
2
Q

TCorig.

= $1,549.00

TCrev.

= $ 774.50

Savings would be $774.50


12.

p = 800 units per day


d = 300 units per day
Q0 = 2000 units per day
a. Number of batches of heating elements per year =

75,000
37.5 batches per year
2,000

b. The number of units produced in two days = (2 days)(800 units/day) = 1600 units
The number of units used in two days = (2 days) (300 units per day) = 600 units
Current inventory of the heating unit = 0
Inventory build up after the first two days of production = 1,600 600 = 1,000 units
Total inventory after the first two days of production = 0 + 1,000 = 1,000 units.
c. Maximum inventory or Imax can be found using the following equation:
pd
p

I max Q0

800 300
2,000
(2,000)(.625) 1,250 units
800

Average inventory

I max 1,250

625 units
2
2

d. Production time per batch =

Q 2 ,000

2.5 days
P
800

Setup time per batch = day


Total time per batch = 2.5 + 0.5 = 3 days
Since the time of production for the second component is 4 days, total time required for both
components is 7 days (3 + 4). Since we have to make 37.5 batches of the heating element per
year, we need (37.5 batches) x (7 days) = 262.5 days per year.

262.5 days exceed the number of working days of 250, therefore we can conclude that there
is not sufficient time to do the new component (job) between production of batches of heating
elements.
An alternative approach for part d is:
The max inventory of 1,250 will last 1250/300 = 4.17 days
4.17 .50 day for setup = 3.67 days. Since 3.67 is less than 4 days, there is not enough time.

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