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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.

1. 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

1. 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?