MSEM 601 WU Inventory Management Techniques Manufacturing Plant Analysis
CLA 2 Comprehensive Learning Assessment 2 – CLO 4, CLO 5, CLO 6, CLO 7
You are in charge of a manufacturing plant. Using your skills related to the Economic Order Quantity (EOQ) model and Economic Production Quantity (EPQ) model for two different work scenarios, your next task is to:
Use EOQ to calculate:
the Annual Demand, the Annual Holding Cost, the Quantity to be Ordered, the Total Annual Cost, and the Reorder Point. Provide a list of the assumptions that you make.
- Given EOQ Parameters from your log:
Weekly Demand = 240 units
# of weeks per year = 52
Ordering Cost = $50
Unit Cost = $15
Annual Carrying Charge = 20%
Lead Time = 2 weeks
Use EPQ to calculate:
the Annual Demand, the Adjusted Total Cost, the Quantity to be Ordered, The Maximum Inventory, and the Adjusted Order Quantity.
Given EPQ Parameters from your log:
Annual Demand = 8,000 units
- Production Rate = 2,500 units/month
Setup Cost = $800
Annual Holding Cost= $18 per unit
Lead Time = 5 days
No of Operating Days Per Month = 20
Provide an overview of the presumptions that you have made. What are your conclusions? When would you use an ABC-analysis and how would that work?
