Operations Management Tools and Methods questions

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timer Asked: Mar 6th, 2019
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Question Description

Deliverable Length:

750 words, APA formatted (with minimum of 3 references)

Assignment Objectives:

Explain the concepts of forecasting, system design, capacity planning, quality management and control, supply chain management, inventory management and scheduling, and project management and how they each relate to form an integrated view of production and operations.

Assignment Details:

As the production manager, you need to minimize both ordering and inventory costs. You need to provide a recommendation of the optimal order quantity of raw materials to your plant manager. Your objective is to determine the economic order quantity (EOQ). If the annual demand for Ultamyacin at Smitheford is 400,000 units, then the annual carrying cost rate is 15% of the cost of the unit. The product costs $48/unit to purchase, and the product ordering cost is $28.00.

In your report, discuss information based on the following questions:

  • What is the basic EOQ?
  • What is the TC (total cost) at the EOQ?
  • How much would the TC increase if the order quantity must be 1,000 units?
  • How is JIT (just-in-time) ordering methodology different from EOQ methodology?

Show all your calculations.

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Tutor Answer

SirHarrytheGreat
School: Cornell University

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Answer outline to OPERATIONS MANAGEMENT TOOLS AND METHODS




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Running head: OPERATIONS MANAGEMENT TOOLS AND METHODS

Operations Management Tools and Methods
Name
Institutional affiliation
Date

1

OPERATIONS MANAGEMENT TOOLS AND METHODS

2

The basic EOQ
EOQ stands for economic order quantity which is the amount that ought to be ordered in order to
minimize the total cost of ordering as well as carrying costs. The formula for EOQ is
EOQ = (2DP/C).
The ordering and carrying costs are equal at this level (Sajadieh & Akbari Jokar, 2009). The
carrying costs are the associated cost of holding an inventory for instance insurance, handling
costs and inventory taxes (Sajadieh & Akbari Jokar, 2009). Every firm must two critical
questions; first is how much inventory it needs to order from suppliers to minimize inventory
costs and second when to place the order.
Given that,
Annual inventory requirement or the demand = 400,000 units
Ordering cost = $28
Production cost per unit = $48
Carrying cost = 15% of the cost of the unit which is 15% of $48
S0, 0.15× 48 = $7.20
EOQ =? (2SO/C)
EOQ ...

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