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Divya Pillay A 03779812 OPSY 5315 Operations Management Case Study #3 – Inventory Management – Wagner Fabricating Company Divya Pillay September 28, 2020
Divya Pillay A 03779812 Executive Summary In this case study, managers at Wagner Fabricating Company are reviewing the economic feasibility of manufacturing a part that the company currently purchases from a supplier. We will use different calculations to determine whether the company should purchase or manufacture the part to meet their forecasted annual demand of 3,200 units. Introduction Forecasted annual demand for the part is 3,200 units. Wagner operates 250 days a year. By calculating and analyzing the holding costs, ordering costs, setup costs, and developments of the inventory policy for a fixed quantity Q from the supplier and a fixed quantity Q from in-plant production, the managers will decide whether to manufacture the part or continue purchasing the part. Presentation I first calculated the holding cost, which is the cost to keep or carry inventory in stock. It is the

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