INDUSTRIAL ENGINEERING PROGRAM
Second Semester/ AY 2023-2024
OPERATIONS MANAGEMENT( INEN 30174)
HOMEWORK #2
Faculty- in charge : Engr. Romeo G. Ilagan
Date
Group # __________________________________
: June ___, 2024
Course and year: ________
Members :
1.____________________________________________
2. ___________________________________________
3. ___________________________________________
Requirements :
1. This is a group activity
2. Submit your typewritten/handwriiten output on a long size bond paper .Use this given template.
3. Due date : on or before June 14 , 2024
Answer the following problems systematically. BOX or encirlce all final answers.
1. Ruel Garcia’s company has compiled the following data on a small set of products .Divide the
items into ABC classification .Shows the annual value and percentage per item .
Item
A
B
C
D
E
Annual demand
110
80
60
200
150
Unit cost
$305
100
50
110
85
2. OSC Merchandise purchase from Sterling paper company. OSC produces magazines and
paperbacks the require 1,215,000 yards of paper per year. The cost per order for the company is $
1,200 ; the cost of holding 1 yard of paper in inventory is $0.08 per year. Determine the following :
a . economic order quantity
b. minimum total annual cost
c. optimal number of orders per year
d. optimal time between orders
3. The Wrap and Carry shopping mart stocks Munchies cereals. Demand for Munchies is 4,000 boxes
per year (365 days). It costs the store $60 per order of Munchies and it costs $ 0.80 per box per year
to keep the cereal in stock. Once an order for Munchies is placed, it takes 4 days to receive the
order from a food distributor. Determine the following:
a. Optimal order size
b. minimum total inventory cost
c. reorder point
4. Tantoco Lumber Company and Mill processes 10,000 logs annually, operating 250 days per year.
Immediately upon receiving an order , the logging company’s supplier begins delivery to the
lumber mill, at a rate of 60 logs per day . The lumber mill has determined that the ordering cost is
$1,600 per order and the cost of carrying logs in inventory before they are processed is $15 per log
on an annual basis .Determine the following :
a. The optimal order size
b. the total inventory cost associated with the optimal order quantity
c. the number of operating days between orders
d. the number of operating days required to receive an order .
5. The office manager for the Sunlife Insurance Company orders letterhead stationery from an office
products firm in boxes of 500 sheets . The company uses 6,500 boxes per year. Annual carrying
costs are $3 per box, and ordering costs are $ 28 . The following discount price schedule is
provided by the supply company
Order quantity ( boxes )
200-999
1,000-2,999
3,000-5,999
6,000+
Price per box
$16
14
13
12
Determine the optimal order quantity and the total annual inventory cost
6. The amount of denim used daily by Levi’s Strauss company in its manufacturing process to make
jeans is normally distributed , with an average of 3,000 yards of denim and a standard deviation of
600 yards. The lead time required to receive an order of denim from the textile mill is constant 6
days . Determine the safety stock and reorder point if Levi’s wants to limit the probability of a
stockout and work stoppage to 5 percent .