fm28 11 - Answer: Computerized control systems would,...

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Mini Case: 28 - 11 j. How would these factors affect an EOQ analysis? 1. The use of just-in-time procedures. Answer: Just-in-time procedures are designed specifically to reduce inventories. If a just in time system were put in place, it would largely obviate the need for using the EOQ model. j. 2. The use of air freight for deliveries. Answer: Air freight would presumably shorten delivery times and reduce the need for safety stocks. It might or might not affect the EOQ. j. 3. The use of a computerized inventory control system, wherein as units were removed from stock, an electronic system automatically reduced the inventory account and, when the order point was hit, automatically sent an electronic message to the supplier placing an order. The electronic system ensures that inventory records are accurate, and that orders are placed promptly.
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Unformatted text preview: Answer: Computerized control systems would, generally, enable the company to keep better track of its existing inventory. This would probably reduce safety stocks, and it might or might not affect the EOQ. j. 4. The manufacturing plant is redesigned and automated. Computerized process equipment and state-of-the-art robotics are installed, making the plant highly flexible in the sense that the company can switch from the production of one item to another at a minimum cost and quite quickly. This makes short production runs more feasible than under the old plant setup. Answer: The trend in manufacturing is toward flexibly designed plants, which permit small production runs without high setup costs. This reduces inventory holdings of final goods....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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