Calculate the economic order quantity, Operation Management

Assignment Help:

The Managing Director of Beauty Soaps Ltd just visited a soap manufacturing firm in Malaysia and he was immensely impressed by its raw materials stock management System. He wanted his Operations manager to implement the just-in-time stock management system in his unit in order to eliminate all the costs associated with keeping stocks. For the Operations manager the local conditions are not conducive for the implementation of such a system. The main raw materials are sodium palmitate noodles, colour and perfume, imported from Malaysia. Wrappers and cartons are produced locally.

(a) Discuss the various costs associated with keeping costs.

(b) Discuss the conditions to be present in order to enable the successful implementation of just-in-time stock management system.

(c) A trader expects to sell about 300 units of a component per month. The storage space taken up by one unit of the product is estimated at Rs 30 per year. The cost associated with ordering is Rs 65 per order and interest rates are expected to be 10% per year. Each unit costs Rs 50.

(i) Calculate the economic order quantity ?
(ii) Calculate the total cost of the component for one year.
(iii) A supplier came up with an offer of supplying the same component at Rs 40 per unit, if the ordering quantity is 600 units per order. Should the trader accept the order?


Related Discussions:- Calculate the economic order quantity

Compute annual holding cost plus the annual ordering cost, The current orde...

The current order quantity for Paul's Pasta Pinwheels is 200 boxes. The order cost is $4 per order, the holding cost is $0.40 per box per year, and the annual demand is 500 boxes p

Cisco systems NPI, 1. Using an appropriate operations framework outline the...

1. Using an appropriate operations framework outline the challenges / risks faced by Cisco in introducing a new product. 2. What are the general operational / supply chain issues i

Explain wastewater treatment plant, Visit the site: Wheaton, IL Sanitary Di...

Visit the site: Wheaton, IL Sanitary District. This tour of a wastewater treatment plant is an example of a high-volume, public project. • How is capacity defined at a wastewate

Explain a principle within a health care organization, What is a principle ...

What is a principle within a health care organization?

Explain the building blocks of competitive advantage, Discuss the building ...

Discuss the building blocks of competitive advantage and the role a manager should play in achieving this advantage.

Explain what are the boundary points of the feasible region, Maxwell Manufa...

Maxwell Manufacturing makes two models of felt tip marking pens. Requirements for each lot of pens are given below. Fliptop Model Tiptop Model Available Plastic 3 4

Technological infrastructure, Identity technological infrastructure that su...

Identity technological infrastructure that supports operations management

How conduct an analysis of american apparel, Conduct an analysis of America...

Conduct an analysis of American Apparel. Assess American Apparel's vertical integration, global strategy, and diversification. Compare American Apparel's approach to Google's

Rock’n Bands: A Project Management Decision-making G, Ask queRock’n Bands: ...

Ask queRock’n Bands: A Project Management Decision-making Gamestion #Minimum 100 words accepted#

Explain company is operating at full capacity, Develop a decision tree for ...

Develop a decision tree for the case of a company is operating at full capacity and with product demand rising. The choice is between new equipment and overtime. A 20% rise in sale

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd