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Peach Inc. is producing very popular MP3 players. Currently, the two models produced are the xPod mini and the xPod maxi. All xPods share the same processor, which is the most expensive part of the xPod, and thus inventory is closely monitored. Purchasing cost for the processor is £50. When more than 50,000 are ordered, there is a rebate of £0.5 per processor (for all ordered). Inventory holding cost (including capital cost) for a processor is £1 per year, order cost (including shipment cost) is £1000 per order. All xPods are highly profitable, with profit contributions of £20 for the xPod mini and £30 for the xPod maxi. Estimated demand for next month are 40,000 and 60,000 for xPod mini and xPod maxi, respectively. Both players are produced in the same factory. The production process consists of two main stages, both are required for both players. Stage 1 can produce a total of 100,000 per month xPods of any type (product mix is not relevant). The output of Stage 2 depends on the type of xPod produced. It can finish an xPod mini every 9 seconds, or an xPod maxi every 18 seconds, and can be operated for 350 hours a month (i.e., it can process up to 70,000 xPod maxi, or up to 140,000 xPod mini, or 35,000 maxi and 70,000 mini if capacity is distributed equally between products etc.). Management has furthermore decided, that production of the xPod maxi should never exceed twice the amount of the xPod mini. In a recent effort to raise profits, the marketing department has suggested to launch a marketing campaign for the xPod mini. It would cost £50,000 and is expected to increase demand for the xPod mini by 10,000 units each month for the next two months, not affecting demand for xPod maxi and demand for the xPod mini reverting to previous demand after the two-months campaign.
What else can I help you with?
What are the uses of EOQ?
"what are the benefit of using EOQ?"
What are the benefit of using EOQ?
"what are the benefit of using EOQ?"
What are difference of reorder level and eoq?
what is the difference between Re oreder level and EOQ
What is the difference between EOQ and MRP?
apa perbedaan antara EOQ DAN MRP
Can eoq answer be in points?
Yes, the Economic Order Quantity (EOQ) can be presented in points for clarity. Key points to consider include: EOQ minimizes total inventory costs by balancing ordering and holding costs. It determines the optimal order quantity that minimizes waste and maximizes efficiency. The formula for EOQ is ( \sqrt{\frac{2DS}{H}} ), where ( D ) is demand, ( S ) is ordering cost, and ( H ) is holding cost. This concise format helps in quick understanding and application of the EOQ concept.
How do you use EOQ to determine when to order items how many and how to order a specific number?
The Economic Order Quantity (EOQ) model helps determine the optimal order quantity that minimizes total inventory costs, including holding and ordering costs. To use EOQ, you first calculate the EOQ using the formula: (EOQ = \sqrt{\frac{2DS}{H}}), where (D) is the annual demand, (S) is the ordering cost per order, and (H) is the holding cost per unit per year. Once you have the EOQ, you can establish reorder points based on lead time and usage rates to determine when to place orders. To order a specific number, simply place an order for the EOQ amount whenever the inventory reaches the reorder point.
What is Economic Order Quantity (EOQ) and how is EOQ calculation helpful for businesses?
Economic Order Quantity (EOQ) is a formula used by businesses to determine the optimal order quantity that minimizes total inventory costs, which include ordering costs and holding costs. By calculating EOQ, businesses can ensure they don’t overstock or understock their inventory, leading to cost savings. The EOQ calculation helps determine the ideal order quantity, taking into account factors such as demand, ordering cost, and holding cost. To calculate EOQ, the formula is: EOQ = √(2DS/H) Where: D = Demand rate (units per year) S = Ordering cost per order H = Holding cost per unit per year By using this formula, businesses can efficiently manage their inventory, reduce unnecessary expenses, and maintain optimal stock levels, improving overall supply chain management. Cloud-based ERP systems can automate EOQ calculations to streamline operations.
What are the components of ordering cost?
eoq =economic ordering cost is constant
How EOQ can reduce stock costs?
Hello, I have a blog with information on reorder dates. I have a few posts that discuss EOQ. This is my post from Feb 28th, 2008(http://excelevolution.wordpress.com/2008/02/28/eoq-economic-order-quantity/) I hope this information will be somewhat useful to you. The EOQ (Economic Order Quantity) is the most cost effective amount to order each time stock needs to be replenished. EOQ is, for all intents and purposes, an accounting formula that determines the point at which the combination of order costs and inventory carrying costs are the least. In purchase-to-stock scenarios, this is known as the order quantity and in make-to-stock manufacturing situations, known as the production lot size. While the EOQ may not be relevant in every inventory situation, most companies will find it beneficial in at least some aspect of their operation. The optimal EOQ result in this table does not affect the EOQ section in the main part of the algorithm and may benefit from some adjustment. The rationale for this is that the optimal EOQ is just the mathematical figure. Please read the EOQ notes at the base of the algorithm to get an idea of how the optimal EOQ can be further refined by taking into account other factors. Once established, this 'corrected' figure can be put into the 'Number of pallets (units) per container (EOQ)' section. The EOQ notes are as follows: *The optimal EOQ will be further refined by taking into account the following factors: If the number of units is too large, these issues may arise: Additional storage space requirements, financial outlay may be too high, risk of spoilage, risk of obsolescence, lost opportunities with invested capital, higher insurance costs & more inventory available to be stolen & damaged. If the number of units is too small, these issues may arise: Inability to benefit greatly from current pricing, quantity discounts may not be offered, more risk of damage whilst in transit if not full multiples, shipping & receiving costs per unit may be higher. Cheers, Peter Phillips
Criticism to Economic order quantity?
The assumptions included in the EOQ models are simplistic;The real cost of stock in operations are not as assumed in EOQ models;The models are really descriptive and should not be used as prescriptive devices.
How lead time is related to EOQ?
Lead time is the time it takes for an order to be delivered once it is placed, while Economic Order Quantity (EOQ) is the optimal order quantity that minimizes total inventory costs. Lead time influences the reorder point in EOQ calculations – a longer lead time may require a higher reorder point to avoid stockouts. It is important to consider lead time variability and safety stock when calculating EOQ to ensure continuous supply chain operations.
What caused many firms to abandon the EOQ model for JIT?
Hello, I have a blog with information on reorder dates. I have a few posts that discuss EOQ. EOQ actually works hand in hand with JIT. This is my post from Feb 28th, 2008(http://excelevolution.wordpress.com/2008/02/28/eoq-economic-order-quantity/) I hope this information will be somewhat useful to you. The EOQ (Economic Order Quantity) is the most cost effective amount to order each time stock needs to be replenished. EOQ is, for all intents and purposes, an accounting formula that determines the point at which the combination of order costs and inventory carrying costs are the least. In purchase-to-stock scenarios, this is known as the order quantity and in make-to-stock manufacturing situations, known as the production lot size. While the EOQ may not be relevant in every inventory situation, most companies will find it beneficial in at least some aspect of their operation. The optimal EOQ result in this table does not affect the EOQ section in the main part of the algorithm and may benefit from some adjustment. The rationale for this is that the optimal EOQ is just the mathematical figure. Please read the EOQ notes at the base of the algorithm to get an idea of how the optimal EOQ can be further refined by taking into account other factors. Once established, this 'corrected' figure can be put into the 'Number of pallets (units) per container (EOQ)' section. The EOQ notes are as follows: *The optimal EOQ will be further refined by taking into account the following factors: If the number of units is too large, these issues may arise: Additional storage space requirements, financial outlay may be too high, risk of spoilage, risk of obsolescence, lost opportunities with invested capital, higher insurance costs & more inventory available to be stolen & damaged. If the number of units is too small, these issues may arise: Inability to benefit greatly from current pricing, quantity discounts may not be offered, more risk of damage whilst in transit if not full multiples, shipping & receiving costs per unit may be higher. Cheers, Peter Phillips
