minco inc is a small manufaturer of fused magnesia and silica. Minco's continuous improvement efforts led to a capacity and production planning software. to prepare for the use of software, a spreadsheet was first used to determine the capacity requirements for the main equipment (the fusion furnances) and the production schedule for the main products. A major product had the following forecast and committed orders (all in thousand dollars): January Feburary Week 2 3 4 1 2 3 4 Forecast 56 56 56 66 66 66 66 Committed order 44 0 18 The initial inventory was 119,000 pounds and the minimum stock at the end week was to be 83,000 pounds. Calculate the economic production quantity (EPQ) if the annual demand is 3,000,000 pounds, setup cost is $350 per setup, inventory holding cost rate is 20 percent per year, unit cost is $2 per pound, demand rate is 500 pounds per hour, and production rate is 1,000 pounds per hour. If EPQ = 100,000 pounds, prepare a production schedule for this product for the next seven weeks. Determine the available-to-promise inventory for the next seven weeks.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 30P

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minco inc is a small manufaturer of fused magnesia and silica. Minco's continuous improvement efforts led to a capacity and production planning software. to prepare for the use of software, a spreadsheet was first used to determine the capacity requirements for the main equipment (the fusion furnances) and the production schedule for the main products. A major product had the following forecast and committed orders (all in thousand dollars):

January Feburary
Week	2	3	4	1	2	3	4
Forecast	56	56	56	66	66	66	66
Committed order	44	0	18

The initial inventory was 119,000 pounds and the minimum stock at the end week was to be 83,000 pounds.

Calculate the economic production quantity (EPQ) if the annual demand is 3,000,000 pounds, setup cost is $350 per setup, inventory holding cost rate is 20 percent per year, unit cost is $2 per pound, demand rate is 500 pounds per hour, and production rate is 1,000 pounds per hour.
If EPQ = 100,000 pounds, prepare a production schedule for this product for the next seven weeks.
Determine the available-to-promise inventory for the next seven weeks.

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