Blanchard Importing and Distributing II1 After his first year at the Harvard Business School‚ Hank Hatch accepted summer employment with Blanchard Importing and Distributing‚ a Boston firm that dealt in the processing and wholesaling of alcoholic beverages. Early in June 1972 Hank met with Toby Tyler‚ the company’s general manager‚ who was a recent graduate of the Harvard Business School. Toby described the initial tasks that he wanted Hank to perform: Hank‚ during your first few days at Blanchard
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REQUIRED CUSTOM TEXT: COMPETITIVE ADVANTAGE FROM OPERATIONS‚ Pearson Custom Publishing; 2006. COMPUTER SOFTWARE: NYU Software Packages EXCEL HARVARD CASES (Included in Custom Text) BENIHANA OF TOKYO KRISTEN’S COOKIE CO. DONNER COMPANY BLANCHARD IMPORTING AND DISTRIBUTING COMPANY‚ INC. L.L. BEAN‚ INC. STANFORD CASE DELL DIRECT. † NYU STERN CASE THE FORD-FIRESTONE CASE OTHER MATERIAL (Included in Custom Text) TERMS USED IN OPERATIONS MANAGEMENT ANALYSIS OF OPERATIONS FCN SECURITIES
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winch. EOQ = square root of ( 2 x R x A) V x W R = annual demand is 1500 units A = ordering cost is $1‚000 for Supplier A and $500 for Supplier B V = cost per unit is $300 W = carrying cost percentage is 23% Supplier A: EOQ = Square root of (2 x 1500 x $1‚000) = S.R. of 3‚000‚000 = 209 ($300 x 23%) 69 Supplier B: EOQ = Square root
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Chapter 8 The Economic Order-Quantity (EOQ) Model Leroy B. Schwarz Purdue University The economic order-quantity model considers the tradeoff between ordering cost and storage cost in choosing the quantity to use in replenishing item inventories. A larger order-quantity reduces ordering frequency‚ and‚ hence ordering cost/ month‚ but requires holding a larger average inventory‚ which increases storage (holding) cost/month. On the other hand‚ a smaller order-quantity reduces average inventory
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constant. ◦ The Economic Order Quantity (EOQ) model Probabilistic Inventory models ◦ The demand is not known. Demand characteristics such as mean‚ standard deviation and the distribution of demand may be known. ◦ A fixed order quantity model ◦ A fixed time period model Economic Order Quantity (EOQ) It is an idealized inventory system to calculate the fixed order quantity that minimizes total costs. This optimal order size is called EOQ. Reorder Level Reorder level = lead time
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soft-drink product that has a constant annual demand rate of 3‚600 cases. A case of the soft drink costs R & B $3.00. If ordering costs are $20 per order and inventory holding costs are charged at 25%‚ what are the EOQ and cycle time in days for this product? 4 A general property of the EOQ inventory model is that total inventory holding and total ordering costs are equal or balanced at the optimal solution. Use the above data to show that this result is observed. 5 The XYZ Company purchases a component
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|p| |i| |i| |c| |c| |]| |]| |Step 1: Initial EOQ | | Question 1: Determine how many kegs of nails Low should order at one time. Answer: EOQ formula is EOQ = √ 2 (annual usage) (cost of placing an order)/annual carrying cost per item = √ 2 (2000) (60)/2 = √120‚000
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CASE 9-1: LOW NAIL COMPANY Question 1: Using the EOQ methods outlined in chapter 9‚ how many kegs of nails should Low order at one time? The EOQ formula is: EOQ = √ 2 (annual use in units) (cost of placing an order) / annual carrying cost per item per year = √ 2 (2000) (60) / 2 = √ 120‚000 = 345 kegs per order Note the 2 in the denominator. That is because‚ on average‚ the rented warehouse space is only half full‚ which‚ makes the average warehousing cost per keg be $2. Question 2: Assume
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Interview Questions Answers - Inventory Management [12:27 PM | ] 1. What is inventory control? Answer: Inventory control is the process of reducing inventory costs while remaining responsive to customer demands. By this definition a store would want to lower its acquisition‚ carrying ordering and stock-out costs to their lowest possible levels. However a store would need to have enough inventories to meet any needs of its customers. 2. What does inventory affect in a store? Answer: Inventory
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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". Given: Demand or Annual inventory requirement = 400‚000 units Ordering cost = $28 Production cost per unit = $48 Carrying cost = 15% of the cost of the unit = 15% of $48 = .15* $48 = $7.20 The basic EOQ: EOQ = ? (2SO/C) Where EOQ = economic order quantity
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