Operations managment
Q4. Answer the problem solving questions below.
A) A Studio-A orders 525 box printing paper for its services monthly at 7.5 KWD each (paper box price). Ordering costs are 32 KWD, and annual carrying costs are 30 percent of the paper box price. Compute the EOQ and Total Cost.
B) The clinic periodically place orders for medical cream (skin care product) to sell to their customers. The operations manager of the clinic knows that they use cream at an amount of 440 packages each month, and it costs 52 USD per year to carry per package of creams in inventory. He also knows that the order costs for cream are 93 USD per order, and that the lead time for delivery is (4) days.
a. What is the Economic Ordering Quantity (EOQ)?
b. How many times in a year should she reorder based on EOQ?
c. What is the length of an order cycle?
d. What is the reorder point (ROP)? (assume 320 days in a year)
e. What will be the total inventory cost if the items are ordered based on EOQ?