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Management Studies

A produce distribution uses 240 packing crates per week, which it purchases at a cost of $20 each. The manager has assigned an annual carrying cost of 30 percent of the purchase price per crate. Ordering costs are $90. Currently the manager orders once every four working weeks. There are 48 working weeks a year. a. What is EOQ? b. What is the number of orders per year using EOQ? c. What is the time between orders in weeks if using EOQ? d. What is the total cost based on the current practice? How much could the firm save annually in ordering and carrying costs by using the EOQ (vs. the current practice)? e. If the order lead-time is 2.5 weeks, what is the reorder point? (ROP) f. If the safety stock policy is that SS= 50, what is the ROP? g. If the standard deviation of the weekly demand distribution is 50 and order lead-time is 2.5 weeks, with SS= 50, what is the service level?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92589454

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