LS2638: (a) A battery wholesale company purchases batteries for Rs. 140, and it costs Rs. 110 to process an order. The company sells about 12,000 of a particular type of battery per year at a uniform rate. The company is open 5 days a week for 52 weeks per year, the order lead time is 3 days, and the company wants to have an average of 2 days’

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Question: (a) A battery wholesale company purchases batteries for Rs. 140, and it costs Rs. 110 to process an order. The company sells about 12,000 of a particular type of battery per year at a uniform rate. The company is open 5 days a week for 52 weeks per year, the order lead time is 3 days, and the company wants to have an average of 2 days’
sales on hand as safety stock when a new order is scheduled to arrive. The holding cost is estimated to be 24 percent of the item cost per year.

Determine the

(i)EOQ.

(ii)Expected level of the maximum inventory

(iii)Reorder level.

(iv)Average inventory level.

(v)Average annual cost to hold inventory

(b)The following table contains information concerning four jobs that are awaiting processing at a work centre.

Sequence the jobs using

(i)Shortest Processing Time (SPT)

(ii)Processing with Due dates Assume the list is by order of arrival For each of the methods, determine the average job flow time, average lateness and average number of jobs at the work centre. Is one method superior to the other? Explain.

 


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