Case Report: Jamie Chang Essay

1. Based on the assumption that all data collected are accurate and the methods utilise to collect are reliable, the EOQ calculations are correct. Given by the EOQ model, the optimal Q (quantity of an fiat) is lop by the equation Oopt=2(Demand Rate)(Order Setup Cost)/(Holding Cost Rate)(1/2). In this case, order setup damage=setup hours per order setup be per hour guardianship cost rate= 30% harvest-feast unit cost.2. Jamie dislodge only shows the optimal stock-taking levels for each crossway A-H, and the belittle in the bonnie livestock level to Garcia, but he overlooks the consequently adjustments in inventory-related cost (annual guild cost, annual dimension cost, and total cost). As shown below, for product A, D, E, F, G and H, whose present order quantity is higher than EOQ optimal order quantity, the decrease in order quantity additions the enjoin cost while decreases the holding cost even to a greater extent, resulting a decrease in total cost. For produ ct B, whose present order quantity is lower than EOQ optimal order quantity, the increase in order quantity increases the holding cost while decreases the ordering cost even more, resulting a decrease in total cost. For product C, whose present order quantity is similar to EOQ optimal order quantity, the holding cost, ordering cost and total cost dont change much.Annual ordering cost = (yearly want)/(order quantity) (setup hours per order) 25 Annual holding cost = 30% (product unit cost) (order quantitiy/2) Annual total cost = annual ordering cost + annual holding costIn general, the EOQ optimal order quantity pass on decrease the inventory-related total cost to the lowest level, which Jamie Change doesnt explain really clearly to Garcia.3. Generally speaking, to balance the cost with the desire to have the right products for customers, we have to take all kinds of cost into account, such as the inventory costs, rent, personnel expenses, cost of goods sold, etc. past we try t o find the right quantity to produce, price to sell, to meet the demand with the lowest cost. But here Lynn Rosen is talking moreabout the inventory cost. When he talks about customer-service level and inventory investment, hes actually talking about meeting customers demand with optical inventory total cost. As is shown below, when he says unnecessary investment in inventories, he means the cadence of cost higher than the lowest cost receivable to non-optimal order quantity.To improve the customer service, the demand will definitely increase. correspond to Oopt=2(Demand Rate)(Order Setup Cost)/(Holding Cost Rate)(1/2)the increase in demand rate will lead to the increase in Oopt, which will besides lead to more inventory cost. As is shown below.4. From external, customers demand stream, especially its variation has a significant role in determining the right, or optimal amount of inventory. From internal, all the holding cost and ordering cost are also keys determining the opti mal amount of inventory.