SCM WEEK Three

Answer the following questions:

Question 1

A company uses 36,000 tyres to produce car wheels every year. The company can make its own tyres simultaneously at a rate of 500 per day and the carrying cost is £2 per tyre per annum. If the company is open for 240 days of the year and each production run incurs a set-up cost of £40, what is:

• Economic production quantity
• Total annual set-up and carrying cost
• Cycle time for economic production quantity
• Run time
  

Be sure to demonstrate your work and provide a brief interpretation. (200 words maximum)

By Day 3, submit your Key Concept Exercise to the submission link provided.

Question 2

Why is inventory management important to an organisation, and how can inventory management enable an organisation to improve its competitiveness? (300 words maximum)