What is the order quantity for raw materials in lbs

Assignment Help Operation Management

Reference no: EM131782106

Mobil Films buy a petroleum based raw material that it uses in its production process for films. The production process demand for this raw material can be approximated by a Normal random variable with mean 16000lbs and standard deviation 5000lbs per day. The supplier of the raw material is far away, and it takes 10 days for the supplier to deliver an order. Each time an order is issued to the supplier Mobil Films incur $375 fixed transportation cost and an additional $55 for handling the paperwork. Annual holding cost for each pound of raw material is 12% and each pound of raw material costs $1.12. Assume that the plant works for 320 days a year. Mobil Films use (r,Q) model to manage inventory and issues orders according to the EOQ.

a) What is the order quantity for raw materials in lbs?

b) If Mobil Films would like to be in stock 97% of all reorder periods, what would be the inventory level that Mobil Films should issue an order?

c) Based on your result in part b, what is the level of pipeline inventory: _____________

what is the level of safety stock: _____________

d) What is the total annual cost per year in managing this raw material inventory?

Reference no: EM131782106

Questions Cloud

God grace most clearly depicted or described : Where in the in the New Testament do you see God's grace most clearly depicted or described? Cite some specific examples in scripture.

Buying committee comprising administrators and physicians : Recently Community Hospital of Bakerstown has decided to form a buying committee comprising administrators and physicians.

Compute the firm operating income before income taxes : The Davis Company normally produces 150,000 units of Product LM per year. Compute the firm's operating income before income taxes

Parts of a code of conduct : What should be included in a COMPONENTS/PARTS OF A CODE OF CONDUCT in the employee ethics training and in the Employee Handbook of a higher education

What is the order quantity for raw materials in lbs : Mobil Films buy a petroleum based raw material that it uses in its production process for films. What is the order quantity for raw materials in lbs?

International cotton market : Analyze in detail the trade barriers in the international cotton market that impact of the cotton industry, and recalculate the parameters of the trade barriers

What makes someone do bad things : What makes someone do "bad" things? This post will highlight the recent case of a juvenile sex offender.

Explain dispute resolution options available to bobbie sue : Briefly explain the dispute resolution options available to Bobbie Sue and Billy Bob to avoid litigation, and the primary benefits of each option.

Define the coefficient of viscous damping : Use a lumped-parameter model and the analytical transfer function approach to calculate the frequency-domain response of the mechanical microsystem sketched.

User Account

All Pages