The chapters assigned for this Session provides a good review of the techniques and responsibilities of Operations Managers dealing with AGGREGATE PLANNING, MASTER SCHEDULING, INVENTORY CONTROL, AND LEAN OPERATIONS. For this first forum, we are going to select Inventory Control to learn how to apply a technique that has been used for many decades and will discuss its validity as it is applied to current needs and technology. Please follow these activities:
Read Chapter 13 in detail
Review the EOQ Model, from section 13.5
Study Example 2 and its solution -this solved exercise is located after Figure 13.4 for students using an eBook. You will find an explanation of the meaning of each element of the formula throughout Chapter 13: Holding cost, ordering cost, EOQ, demand, and other implications
Conduct a sensitivity analysis by experimenting with very high holding costs (the case of the 21st century) and very low ordering costs (thanks to online ordering).
Using a spreadsheet, or the spreadsheet provided by the textbook online templates, explore the following three scenarios and post the results on one spreadsheet. You will show the formula and results:
Determine the EOQ by increasing significantly the HOLDING COST between ten to twenty times the amount used by the textbook. Present the formula and results of the new EOQ. You will keep the original demand (9,600 units) and ordering costs, S ($75) the same
Determine a second EOQ by decreasing the ORDERING COSTS to one tenth (1/10) or lower and keeping the original demand and holding costs, H ($16) the same.
Determine a third EOQ by increasing the holding cost to the level you selected and decreasing the ordering cost at the same time based on the last scenario. You keep the demand the same
Study the three scenarios and write a paragraph with your interpretation of results. What is the meaning, based on current business trends and technology, to have increasing holding costs and decreasing ordering costs? What is happening to the EOQ?
Submit one file with the three formulas and results and your concluding thoughts. As a reference, find attached a similar analysis done for a different EOQ case.