Chapter 2: Problem 4

Consider the following situations. Label them as either A for appropriate or \(L\) for less appropriate for application of the \(\mathrm{EOQ}\) model. a. Automobile manufacturer ordering screws from a vendor b. Automobile manufacturer deciding on how many cars to paint per batch of a particular color A job shop ordering bar stock d. Office ordering copier paper A steel company deciding how many slabs to move at once between the casting furnace and the rolling mill

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a. Automobile manufacturer ordering screws from a vendor b. Automobile manufacturer deciding on how many cars to paint per batch of a particular color c. A job shop ordering bar stock d. Office ordering copier paper e. A steel company deciding how many slabs to move at once between the casting furnace and the rolling mill Answer: b, e

Step by step solution

Situation a: Automobile manufacturer ordering screws from a vendor

The demand for screws in an automobile manufacturing process is predictable and continuous. The lead time for receiving screws from the vendor can be considered constant. The EOQ model can be used effectively since the conditions match the EOQ assumptions. Label: A

Situation b: Automobile manufacturer deciding on how many cars to paint per batch of a particular color

The demand for painting cars in a specific color is not constant, and the replenishment lead time does not come into the picture, as there is no ordering process involved. This makes the EOQ model less appropriate in this case. Label: L

Situation c: A job shop ordering bar stock

In a job shop, the demand for bar stock is predictable and continuous, as it is essential for the manufacturing processes. The lead time for receiving bar stock from suppliers is likely to be constant. The EOQ model can be used effectively in this situation. Label: A

Situation d: Office ordering copier paper

The demand for copier paper in an office is predictable and continuous. The lead time for receiving copier paper from the supplier can be considered constant. The EOQ model can be effectively used for determining the ideal order quantity for copier paper. Label: A

Situation e: A steel company deciding how many slabs to move at once between the casting furnace and the rolling mill

The decision about how many slabs to move between the casting furnace and the rolling mill depends on factors such as production capacity and efficiency. The EOQ model is not appropriate to be applied in this situation as it does not consider ordering or replenishment processes. Label: L Labeling: A for appropriate and L for less appropriate situations: a. A b. L c. A d. A e. L

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Step by step solution

Situation a: Automobile manufacturer ordering screws from a vendor

Situation b: Automobile manufacturer deciding on how many cars to paint per batch of a particular color

Situation c: A job shop ordering bar stock

Situation d: Office ordering copier paper

Situation e: A steel company deciding how many slabs to move at once between the casting furnace and the rolling mill

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