Problem 1: Santino Company's vice president for finance has decided to use delivery

performance measures to evaluate performance. He requested the production manager to submit

data that will be used for the evaluation. The production manager submitted the following,
which, accordingly is typical of the time involved to, complete orders:

Waiting time from orders being placed to start of production 6 days

Waiting time from start of production to completion 2 days
Process time 1 week
Move time 4 days
Inspection time 1 day

The company operates seven days a week.

What is the delivery cycle time? 2o days

The total manufacturing cycle (or throughput) time is 14 days

The value-added production time is 7 days

What is the manufacturing cycle efficiency? 50%

What is the delivery cycle efficiency? 35%

Problem 2: Kotse-Kotsehan Company manufactures toy cars. It divided its production line into
different manufacturing cells. One cell in the assembly department installs the motor in the toy
cars. The maximum capacity of the cell is 5,000 units per month. There are 2,500 production
hours available per month.

If the cell uses 2 minutes of move time, 5 minutes of wait time, and 3 minutes of inspection time,
what is the manufacturing cycle efficiency?75 %

Problem 3: Emil Traders, Inc. sells cellphone cases which it buys from a local manufacturer.
Emil Traders sells 24,000 cases evenly throughout the year. The cost of carrying one unit in
inventory for one year is P11.52 and the order cost per order is P38.40.

What is the economic order quantity? P400

If Emil Traders would buy in economic order quantities, the total order costs is 2,304 PHP

If Emil Traders would buy in economic order quantities, the total inventory carrying costs per
year is Php 2304

Problem 4: The following information is available for Edgar Corporation's Material X

Annual usage 12,600 units
Working days per year 360 days
Normal lead time 20 days

The units of Material X are required evenly throughout the year.

What is the reorder point? 700 units

Assuming that occasionally, the company experiences delay in the delivery of Material X, such
that the lead time reaches a maximum of 30 days, how many units of safety stock should the
company maintain and what is the reorder point? Safety stock, 350; Reorder Point, 1,050.

Problem 5: Using the EOQ model, Apple Baby Corporation computed the economic order
quantity for one of the products it sells to be 4,000 units, Apple Baby Corporation maintains
safety stock of 300 units. The quarterly demand for the product is 10,000 units. The order cost is
P200 per order. The purchase price of the product is P2.40. The company sells at a 100%
markup. The annual inventory carrying cost is equal to 25% of the average inventory level.

The annual inventory carrying costs is

P1,380
The total Inventory order cost per year is
P2,000