Jones Electric Motors uses a Kanban system to make motors for several garage door companies in the southeastern United States. T
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Answer:
Difference between A and B =$42398.5
Process B is better as its PW value is smaller than Process A.
Explanation:
In order to use present worth, both Alternatives must have same time period. Since Process B has 4 years means 16 quarters so we make process A to have 16 quarters two with 2% interest rate per quarter.
Note:
We are going to use Compound Interest tables to simplify our work. Formulas can also be used.
For Process A:
Present value of process A=
Present value of process A=
Present value of process A=-$466,932.5
For Process B:
Present value of process B=
Present value of process B=
Present value of process B=-$424,534
Difference between A and B =(-$424,534)-(-$466,932.5)
Difference between A and B =$42398.5
Process B is better as its PW value is smaller than Process A.
Answer:
93 units
Explanation:
Annual demand for an item = 11,000 units
cost per unit = $250
holding rate = 10%
Order cost = $14.00 per order
No. of days in a year = 260
Lead-time = 2 days
= 42.3 units
For a service level of 97%, the value of z is 1.881
Therefore,
Reorder point:
= Average daily demand × Lead time + Standard deviation of the daily demand × no. of standard deviation corresponding to service level probability ×
= (42.3 × 2) + (3 × 1.88 × )
= 92.57
= 93 units