HOW MUCH COULD THE FIRM SAVE ANNUALLY IN ORDERING AND CARRYING COSTS BY USING THE EOQ?

16 Jun 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?

•
Yes
•
No

Problem 14-7
Compute the takt time for a system where the total time per shift is 370 minutes, there is one shift, and workers are given 2 13-minute breaks and 30 minutes for lunch. Daily demand is 353 units. (Round your answer to 2 decimal places.)

Takt time minutes per cycle

Problem 14-8
What cycle time would match capacity and demand if demand is 173 units a day, there are 2 shift(s) of 458 minutes each, and workers are given three 35 minute breaks during each shift, one of which is for lunch or dinner? (Round your answer to 2 decimal places.)

Cycle time minutes per cycle

Problem 15-1
A manager at Strateline Manufacturing must choose between two shipping alternatives: two-day freight and five-day freight. Using five-day freight would cost $210 less than using two-day freight. The primary consideration is holding cost, which is $10 per unit a year. 2,450 items are to be shipped.

Which alternative would you recommend? (Do not round your intermediate calculations.)

•
Five-day freight
•
Two-day freight

Problem 15-2
Determine which shipping alternative would be most economical to ship 63 boxes of parts when each box has a price of $286 and holding costs are 26 percent of price, given this shipping information: overnight, $405, two-day, $265, six-day, $215. (Round your intermediate calculations to 2 decimal places.)

•
Overnight
•
Two-day
•
Six-day

Problem 15-3
A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $504 and B for $526. In addition, A offers a three-day rate of $472 and a nine-day rate of $410, and B offers a four-day rate of $452 and a seven-day rate of $428. Annual holding costs are 30 percent of unit price. Three hundred and sixty boxes are to be shipped, and each box has a price of $150. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the “$” sign in your response.)

A

B
Option
Cost

Option
Cost
2 days
$

2 days
$
3 days
$

4 days
$
9 days
$

7 days
$

•
Ship two-day using A
•
Ship three-day using A
•
Ship two-day using B
•
Ship four-day using B
•
Ship seven-day using B

Problem 16-8
The following table shows orders to be processed at a machine shop as of 8:00 a.m. Monday. The jobs have different operations they must go through. Processing times are in days. Jobs are listed in order of arrival.

Job
Processing
Time (Days)
Due Date
(Days)
Remaining Number
of Operations
A
8

20
2
B
10

18
4
C
5

25
5
D
11

17
3
E
9

35
4

a. Determine the processing sequence at the first work center using each of these rules: (1) First come, first served, (2) Slack per operation. (Hint: In case of a tie choose the jobs in alphabetical order.)

Sequence for First come, first served
(Click to select)A-B-C-D-EB-D-C-A-EC-A-B-D-ED-A-C-B-EE-A-B-C-D
Sequence for Slack per operation
(Click to select)A-B-C-D-EB-D-C-A-EC-A-B-D-ED-A-C-B-EE-A-B-C-D

b. Compute the effectiveness of each rule using each of these measures: (1) average completion time, (2) average number of jobs at the work center. (Round your answers to 2 decimal places.)

First Come,
First Served
Slack per Operation
Average completion time

Average number of jobs

Problem 16-18
The Budd Gear Co. specializes in heat-treating gears for automobile companies. At 8:00 a.m., when Budd’s shop opened today, five orders (listed in order of arrival) were waiting to be processed.

Order
Order Size
(units)
Per Unit Time in
Heat Treatment
(minutes/unit)
Due Date
(min. from now)
A
16
4
160
B
6
12
200
C
10
3
180
D
8
10
190
E
4
1
220

a. If the due date rule is used, what sequence should be used?

The sequence is (Click to select)A-C-D-B-EB-A-C-D-EC-A-B-E-DD-E-A-C-BE-A-B-C-D .

b. What will be the average job tardiness? (Round your answer to 2 decimal places.)

Average job tardiness

c. What will be the average number of jobs in the system? (Round your answer to 2 decimal places.)

Average number of jobs

d. Would the Shortest processing time rule produce better results in terms of average job tardiness? (Round your answer to the nearest whole number.)

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