As The Production Manager You Need To Minimize Both Ordering And Inve ✓ Solved

As the production manager, you need to minimize both ordering and inventory costs. You need to provide a recommendation of the optimal order quantity of raw materials to your plant manager. Your objective is to determine the economic order quantity (EOQ). If the annual demand for Ultamyacin at Smitheford is 400,000 units, then the annual carrying cost rate is 15% of the cost of the unit. The product costs /unit to purchase, and the product ordering cost is .00.

In your report, discuss information based on the following questions: · What is the basic EOQ? · What is the TC (total cost) at the EOQ? · How much would the TC increase if the order quantity must be 1,000 units? · How is JIT (just-in-time) ordering methodology different from EOQ methodology? Kaplan University School of Health Sciences HW315 Unit 5 Assignment Unit 5 Assignment There are two Assignments in this unit. Be sure to do both as they are graded separately. Unit outcomes addressed in this Assignment: • Recognize the ways in which the practice of medicine continues to evolve due to a change in focus from treating disease to emphasizing achieving and maintaining health. • Assess the relationship between hospital-based services to community versus the traditional role of hospitals in the care continuum. • Assess the value in using community-based models to improve health outcomes.

Course outcome assessed/addressed in this Assignment: HW315-4: Critique contemporary models of health drawing from their major proponents. GEL-1.1: Demonstrate college-level communication through the composition of original materials in Standard American English. Assignment 1: Key Components of an Ideal Healthcare System Instructions Based on the readings about health care in other countries, choose one country (Great Britain, Sweden, or Japan) and compare and contrast its health care system with that of the United States. Describe similarities and differences between the systems and identify what component you would like to see in the US system. This Assignment needs to be 2–3 pages in length, written in APA format, and must include appropriate references.

Assignment 2: Research on Mental Health Resources What mental health services and resources are available in your community? List your answers and indicate how you obtained the information. If you used a website, what is the link? If you spoke with someone, what is the person’s name and agency? Submitting your work: Submit each Assignment to the appropriate Dropbox for Unit 5.

For instructions on submitting your work, view the Dropbox Guide located under Academic Tools at the top of your unit page. Please be sure to download the file “Writing Center Resources†from Doc Sharing to assist you with meeting APA expectations for written Assignments. Kaplan University School of Health Sciences HW315 Unit 5 Assignment To view your graded work, come back to the Dropbox or go to the Gradebook after your instructor has evaluated it. Make sure that you save a copy of your submitted work. Unit 5: Paper Assignment Grading Rubric = 95 points Assignment Requirements Points possible Points earned by student The student describes the health care system of the other country.

0–25 The student identifies two differences between that system and the US health care system. 0–25 The student identifies two similarities between that system and the US health care system. 0–25 The student explains any elements that they would like to have incorporated into the US system. 0–20 Total (Sum of points earned): 95 Points deducted for spelling, grammar, and/or APA errors: Adjusted total points earned: Instructor Feedback*: *Instructor may also leave feedback comments within Assignment submission. Kaplan University School of Health Sciences HW315 Unit 5 Assignment Unit 5: Research Assignment Grading Rubric = 10 points Assignment Requirements Points possible Points earned by student The student identifies mental health services and resources available in his or her community.

0–8 The student identifies the source of information. 0–2 Total (Sum of all points): 10 Points deducted for spelling, grammar, and/or APA errors: Adjusted total points: Instructor Feedback:

Paper for above instructions

Report on Economic Order Quantity (EOQ) for Ultamyacin

Introduction

As the Production Manager at Smitheford, managing the costs associated with raw materials is critical to maintaining financial efficiency and ensuring the smooth operation of production lines. To this end, employing the concept of Economic Order Quantity (EOQ) is vital. EOQ helps determine the optimal quantity of inventory to order at a time, minimizing the total costs of ordering and carrying inventory. This report calculates the EOQ for Ultamyacin with specific parameters, evaluates the total cost associated with this order quantity, and contrasts EOQ with the Just-In-Time (JIT) inventory management methodology.

Basic EOQ Calculation

The EOQ can be calculated using the formula:
\[
EOQ = \sqrt{\frac{2DS}{H}}
\]
Where:
- \( D \) = Annual demand (400,000 units)
- \( S \) = Ordering cost per order (.00)
- \( H \) = Annual holding cost per unit
Given that the purchase cost of the product is , the annual holding cost can be calculated as 15% of this cost:
\[
H = 0.15 \times 48 = 7.20
\]
Inserting the values into the EOQ formula yields:
\[
EOQ = \sqrt{\frac{2 \times 400,000 \times 28}{7.20}} = \sqrt{\frac{22,400,000}{7.20}} = \sqrt{3,111,111.11} \approx 1,761.78
\]
Thus, the basic EOQ for Ultamyacin is approximately 1,762 units.

Total Cost at the EOQ

The total cost (TC) at the EOQ can be calculated using the formula:
\[
TC = \frac{D}{Q} \times S + \frac{Q}{2} \times H + DC
\]
Where:
- \( Q \) = EOQ (1,762)
- \( C \) = Cost per unit ()
Plugging in the numbers, we calculate each component of the total cost:
1. Ordering Cost:
\[
\frac{D}{Q} \times S = \frac{400,000}{1,762} \times 28 \approx 22,720.44
\]
2. Holding Cost:
\[
\frac{Q}{2} \times H = \frac{1,762}{2} \times 7.20 \approx 6,367.20
\]
3. Purchase Cost:
\[
DC = 400,000 \times 48 = 19,200,000
\]
Now, combining these costs:
\[
TC = 22,720.44 + 6,367.20 + 19,200,000 \approx 19,229,087.64
\]
Thus, the total cost at the EOQ is approximately ,229,088.

Total Cost at a Fixed Order Quantity of 1,000 Units

Next, we need to calculate how the total cost would change if the order quantity is fixed at 1,000 units instead of the EOQ.
1. Ordering Cost:
\[
\frac{D}{Q} \times S = \frac{400,000}{1,000} \times 28 = 11,200
\]
2. Holding Cost:
\[
\frac{Q}{2} \times H = \frac{1,000}{2} \times 7.20 = 3,600
\]
3. Purchase Cost:
\[
DC = 400,000 \times 48 = 19,200,000
\]
Now, adding these cost components:
\[
TC = 11,200 + 3,600 + 19,200,000 \approx 19,214,800
\]
To summarize, if the order quantity is fixed at 1,000 units, the total cost would be approximately ,214,800.

Total Cost Increase with Fixed Order Quantity

The increase in total cost when ordering 1,000 units instead of the EOQ can be calculated as follows:
\[
\text{Increase in TC} = TC (1,000) - TC (EOQ) = 19,214,800 - 19,229,088 \approx -14,288
\]
This indicates a decrease of ,288 in total cost when shifting to a fixed quantity of 1,000 units.

Just-In-Time (JIT) vs. EOQ Methodology

While EOQ focuses on determining the optimal order size for efficiency in cost management, the Just-In-Time (JIT) methodology emphasizes reducing inventory levels altogether by ordering raw materials only as they are needed in production.
1. EOQ Methodology:
- Seeks to find a balance between ordering and carrying costs.
- Quantifies how much inventory to purchase at once for optimal cost efficiency.
2. JIT Methodology:
- Aims to minimize inventory levels and associated carrying costs, potentially leading to lower excess inventory.
- Enhances responsiveness to demand but may involve higher ordering frequency and associated risks of stockouts.
In conclusion, while EOQ provides a structured approach to inventory management to minimize costs, JIT focuses on reducing excess inventory and increasing operational efficiency, each with its advantages and disadvantages.

Conclusion

In summary, calculating the EOQ for Ultamyacin reveals that the optimal order quantity is approximately 1,762 units. The total cost at this order quantity is approximately ,229,088. By opting for a fixed order quantity of 1,000 units, there is a decrease in total costs by approximately ,288. The EOQ and JIT methodologies, while both striving for efficiency, represent fundamentally different approaches to inventory management.

References

1. Harris, F. W. (1913). "How Many Parts to Make at Once." Factory, The Magazine of Management.
2. Silver, E. A., & Peterson, R. (1985). "Decision Systems for Inventory Management and Production Planning." John Wiley & Sons.
3. Lee, H. L., & Billington, C. (1992). "Supply Chain Management: Theory and Practice." Interfaces.
4. Krajewski, L. J., & Ritzman, L. P. (2005). "Operations Management: Process and Supply Chain Management." Pearson.
5. Heizer, J. & Render, B. (2015). "Operations Management." Pearson.
6. Gupta, A., & Singh, A. R. (2015). "Economic Order Quantity for Inventory Model of a Multi-Product and Multi-Period." American Journal of Operations Research, 5(4), 265 – 274.
7. Fisher, M. (1997). "What Is the Right Supply Chain for Your Product?" Harvard Business Review.
8. Womack, J. P., & Jones, D. T. (2003). "Lean Thinking: Banish Waste and Create Wealth in Your Corporation." Simon & Schuster.
9. Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2006). "Operations Management." McGraw-Hill.
10. Coyle, J. J., Langley, C. J., & Ginter, J. L. (2003). "The Management of Business Logistics: A Supply Chain Perspective." South-Western College Publishing.