What is the number of production runs per year of computer chairs that would minimize the sum of carrying and setup costs for the coming year?
Answer(s): D
The EOQ minimizes the sum of carrying and setup costs. The EOQ is the amount at which carrying costs are equal to setup casts. Thus, plugging the data into the EOQ formula results in the following:If: A = cast to initiate a production run per purchase order D = annual unit demandK = cost of carrying one unit per year
If RCF does not maintain a safety stock, the estimated total carrying costs for the computer chairs for the coming year based on their current schedule is:
Answer(s): C
Given four production runs and an annual demand of 5,000 units, each production run must generate 1,250 units. Inventory will total 1,250 units at the completion of each run but will decline to zero just prior to the next run. Thus, the average inventory is 625 units 1,250 - 2), and the total carrying cost is US $6,250 625 units x $10).
Each stock out of a product sold by Company I-: costs US $1,750 per occurrence. The carrying cost per unit of inventory is US $5 per year, and the company orders 1,500 units of product 24 times a year at a cost of US $100 per order. The probability of a stock out at various levels of safety stock is.What is the optimal safety stock level for the company?
The total expected cost of safety stock equals the sum of the expected annual stock out cost and the expected annual carrying cost. Annual expected stock out cost equals the cost per occurrence US $1,750), times the probability of a stock out per cycle, times the number of cycles 24). Annual expected carrying cost of a safety stock equals the unit carrying cost US $5) times the number of units. Hence, a safety stock of 400 units has the lowest total expected cast.
A major justification for investments in computer-integrated manufacturing CIM) projects is:
Answer(s): A
Automating and computerizing production processes requires a substantial investment in fined assets and an increase in risk because of greater fixed costs. CI also necessitates an increase in software costs and extensive worker retraining. However, the costs of spoilage, rework, and scrap are reduced along with labor costs. The qualitative advantages of I are increased flexibility, shorter manufacturing lead time, quicker development of new products, better product delivery and service, faster response to market changes, and improved competitiveness.
A major benefit of computer integrated manufacturing CIM) is:
CIM entails a holistic approach to manufacturing in which design is translated into product by centralized processing and robotics. CIM can help an organization reduce costs of spoilage, increase flexibility, and increase productivity. Flexibility is the key benefit. A traditional manufacturing system might become disrupted from an emergency change, but CII1 will reschedule everything in the plant when a priority requirement is inserted into the system.
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