Operation Management

Chapter 6 Questions 1 and 3 – Grading Guidelines

You’ll find this assignment on Page 227, Chapter 6 of the text.  There are two numbered questions, each with two subsections.  The entire assignment is worth 100 points; each subsection is then worth 25 points.  To receive full credit, you’ll need to:

1.Answer each numbered question, parts a and b.

2.Defend your answer with examples of explanations.  These are largely math questions, but you’ll want to be able to justify how you arrived at it.  If the math is wrong but your reasoning is accurate, you can still get most or even all of the points (this isn’t a math class).  

3.Use course concepts where applicable in your response.  For example, important equations for this week’s assignment include Equation 6 on page 217, and Equation 2 on page 205.

Questions

1. The current order quantity for Paul’s Pasta Pinwheels is 200 boxes. The order cost is $4 per order, the holding cost is $0.40 per box per year, and the annual demand is 500 boxes per year.

a. Calculate the annual holding cost plus the annual ordering cost to get the total annual cost when using an order quantity of 200 boxes.

b. Calculate the EOQ and the total annual cost for this order quantity.

3. Hottenstein, Griffith, and Hult, attorneys at law, do a great deal of printing. The firm uses a single type of printer with annual demand for print cartridges of 480 per year. The order cost is $15 per order, and the carrying cost is 20 purchase cost of $35 per cartridge.

a. How many print cartridges should the firm order at one time?

b. What is the time between orders?