Assignment:
Q1. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year
What is the EOQ for the component?
Q2. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year
What is the average flow time (days)?
Q3. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year
What is the total annual holding and ordering costs associated with your recommended EOQ?
Q4. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year
What is the total cost associated with this recommended EOQ?
Q5. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per year
Suppose that Westside’s management likes the operational efficiency of ordering once a month in quantities of 1000. How much more expensive would this policy be?
Q6. Westside Auto purchases a component used in the manufacture of automobile generators directly from the supplier.
Westside’s generator production operation (which operates at a constant rate) will require 1000 components per month. Assume that ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory.
Westside has 250 working days per years
Would you recommend this change? (yes or no)
Provide complete and step by step solution for the question and show calculations and use formulas.
Please review the document enclosed here:
Attachment:- Component costs.rar