1. In a lean materials management system

Topic: Job activities on the shop floor

Explain "produce product only to a customer order not a production schedule"

2. For an EOQ ordering quantity of 750 units, an ordering cost of $5 per order, a holding cost of $10 per unit per year, and an annual demand of 900 units, what is the annual total cost for this value of Q?

3. ACME is trying to decide on an inventory for a common item, notepads. Presently they order 5,000 notepads at a time, and they are wondering if ordering more or less than 5,000 notepads might be more economical. They have been experiencing some problems with being out of stock. The demand for their notepads is 100,000 per year . It costs them 25% of the acquisition cost to keep one note pad in inventory for a year. The order cost is $2.00 and the acquisition cost is $1.00. Assume 365 business days in a year.

Approximately how many note pads should ACME order each time so that cost is minimized? (Hint: compute the EOQ)

a. Exactly 5,000 notepads

b. At least 1000 but less than 1300

c. Between 1300 and 2000 notepads

d. At least 2500 notepads