Section B: Answer ANY 2 of the following 3 questions (2x2040 points I. a. What a

Question

Section B: Answer ANY 2 of the following 3 questions (2x2040 points I. a. What are the five assumptions of basic Economic Order Quantity (EOQ) model? b. What is a Lean System? What are eight types of waste identified in Lean System approach? 2. The Gaint Farmer Company Processes food for Sale in discount food stores. It has tw plants: One in Chicago and one in Houston, The Company also operate warehouses Miami, Florida; Denver, Colorado; Lincoln, Nebraska; and Jackson, Mississippi. Foreca indicate that demand soon will exceed supply and that a new plant with a capacity of 8,0 cases per week is needed. The question is where to locate the new plant. Two potential si are Buffalo, New York, and Atlanta. The two tables at the bottom give data on capacit forecasted demand and, and shipping costs that have been gathered. For each alternative new plant location, determine the shipping pattern that will mini total transportation costs. Where should the new plant be located? Capacity (Cases Demand (Cases Plant Chicago Houston New Plant Warehouse for Week) Miami Denver Lincoln Jakson Total Demand25,500 for Week) 10,000 7,500 8,000 7,000 9,000 4,500 5,000

Explanation / Answer

1a. EOQ (economic order quantity) is the one which determines the optimum purchase and inventory, which minimize the total purchase or inventory cost of a product. It minimizes the ordering and carrying cost a given mateiral.

assumptinos of EOQ:

b. Lean system: Is the one which minimizes the wastage in a production process without compromising our losing its output. The 8 defects are:

2. new plant must be establish at near to Denver, where only this plant is carrying the capacity of 9000 units per week. the remaining warehouses are carrying lesser capacity than the demand of 8000 units. Hence Denver is carrying higher demand than 8000 units.

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