# Sturdivant Sound System Paper

## Sturdivant Sound System Paper

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Sturdivant Sound System Case Study
MBA630: Operations Management
11/21/2015

Introduction:
This paper takes on the theory of operation and manufacturing management in a general concept. “Sturdivant Sound Systems manufactures and sells sound systems for both home and auto. All parts of the sound systems, with the exception of DVD player, are produced in the Rochester, New York, plant. DVD players used in the assembly of Sturdivant systems are purchased from Morris Electronics of Concord, New Hampshire Sturdivant management will embark on a companywide cost control program in an attempt to improve its profits” (Heize & Render, 2011). The intent of this speculative is to address the issue of economic optimal order quantity, determine the reorder point, and cost savings in relative to optimal inventory procurement processes that aids in managing production and business operations in the case study of Sturdivant Sound Systems.
Computed Variables:
Annual Demand
5000

Ordering Cost
\$20

Holding Cost
\$6

Units per day
20

Cost per Unit
\$60

Total time DOO-DOR
5 days

Number of orders per year
27.4

Inventory Carrying Cost
\$1,095
Number of orders per week
13

Present Total Cost
\$301,095
Average order size
385

EOQ optimal order quantity
183
Holding Cost
549

Average Inventory
91.3
Annual cost of ordering
546

EOQ Cost savings
301,414
Purchase cost
\$300,000

Reorder point
100
Order cost
\$260

Cost savings optimal inventory procurement
319

Discussion Questions:
1. Compute the optimal order quantity of DVD players.
EOQ =SQRT(2*Demand*Ordering Cost/Holding)
EOQ =SQRT(2*5000*20/6)
EOQ = 183
The optimal order quantity is 183 units.
2. Determine the appropriate reorder point (in units).
The reorder point is equal to units per day and the lead-time in days.
ROP= d*L=> d=20*L=5
ROP= 20*5
ROP= 100

3. Compute the cost savings that the...