23 May HOW MUCH COULD THE FIRM SAVE ANNUALLY IN ORDERING AND CARRYING COSTS BY USING THE EOQ?
Problem 13-6
A produce distributor uses 780 packing crates a month, which it purchases at a cost of $8 each. The manager has assigned an annual carrying cost of 40 percent of the purchase price per crate. Ordering costs are $28. Currently the manager orders once a month.
How much could the firm save annually in ordering and carrying costs by using the EOQ? (Round intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.)
Savings $ per year
Problem 13-9
The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 6,000 per day. FSF supplies hot dogs to local restaurants at a steady rate of 280 per day. The cost to prepare the equipment for producing hot dogs is $68. Annual holding costs are 48 cents per hot dog. The factory operates 298 days a year.
a. Find the optimal run size. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Optimal run size
b. Find the number of runs per year. (Round your answer to the nearest whole number.)
Number of runs
c. Find the length (in days) of a run. (Round your answer to the nearest whole number.)
Run length (in days)
Problem 13-12
A company manufactures hair dryers. It buys some of the components, but it makes the heating element, which it can produce at the rate of 830 per day. Hair dryers are assembled daily, 248 days a year, at a rate of 315 per day. Because of the disparity between the production and usage rates, the heating elements are periodically produced in batches of 2,300 units.
a. Approximately how many batches of heating elements are produced annually? (Round your answer to 2 decimal places.)
Number of batches
b. If production on a batch begins when there is no inventory of heating elements on hand, how much inventory will be on hand 4 days later?
Number of inventory
c.What is the average inventory of elements, assuming each production cycle begins when there are none on hand? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Average inventory
d. The same equipment that is used to make the heating elements could also be used to make a component for another of the firm’s products. That job would require 6 days, including setup. Setup time for making a batch of the heating elements is a half day. Is there enough time to do this job between production of batches of heating elements?
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