THTR 206 Production Management

For the supply and storage of components in companies, Production Managers have to implement the most efficient strategies.

1. Explain the most common Inventory Control systems implemented by companies.
2. Say examples of some of the companies where these systems are implemented and the profits that they have reached.
3. Compare these systems and explain the advantages and disadvantages of each one.

One of the Toyota plants must decide how many of a particular type to order for manufacturing automobiles. The company plans to produce 300,000 cars in the next year. All cars planned for production use the same wheels (4 units per car); therefore, demand for the wheels for the next year is known to be 1,200,000 units. The purchasing agent wants to know how many wheels to buy at one time. Historically, wheels have been received half a day (lead time) after they were ordered. It costs € 50 to order wheels, and the holding-cost fraction used by the auto company is 20 % per year. The wheels cost € 25 each

a. Compute the Economic Order Quantity.

b. What is the number of orders per year?

c. What is the frequency of orders? Assume the company works 365 days a year.

d. What is the reorder point?

e. The company works with a Safety Stock of 0.75 days. What is the level of this stock?

f. What is the Average Stock?

g. What is the total Holding Cost?

h. What is the total Ordering Cost?

i. What is the total Cost of Stock Management?

j. Draw the evolution of stock in time (the stock chart)