Sturdivant Sound System Case Study
MBA630: Operations Management
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.
Units per day
Cost per Unit
Total time DOO-DOR
Number of orders per year
Inventory Carrying Cost
Number of orders per week
Present Total Cost
Average order size
EOQ optimal order quantity
Annual cost of ordering
EOQ Cost savings
Cost savings optimal inventory procurement
1. Compute the optimal order quantity of DVD players.
EOQ =SQRT(2*Demand*Ordering Cost/Holding)
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
3. Compute the cost savings that the...