Name : Nadiatul Qalbi Amalia Rizqi

Student ID : 041911333077

Materials: Controlling, Costing, and Planning

Economic Order Quantity

The most economical amount of purchase orders so as to minimize annual inventory
costs.
Inventory Costs include:
a. Carrying Costs: the cost of storing raw materials
b. Ordering Costs: the cost of ordering raw materials
c. Annualy units Demand: how much is the demand for a particular unit in a year.
EOQ minimizes carrying costs and ordering costs.

Differences between Lean Manufacturing and Traditional Manufacturing

Traditional
Aspects Manufacturing Lean Manufacturing
No. of equipment and
people High Less
Factory space for same
output High Less
Work in Progress (WIP) High Less
Defects High Less
Operational availability Less High
Production Lead time High Less
Inventory Inventory is good Inventory is WASTE
Push system scheduled Pull system scheduled by 
System schedule internally Customer Requirements
Focus on Value-Add Focus on Non-Value-Add
Focus improvement(5%) Waste Elimination (95%)
Direct labor cost is a small
percentage of total labor
Direct labor cost High direct labor cost cost
Cycle time Long cycle time Short cycle time
Production for inventory Production on demand
Production (Just In Case-JIC) (Just In Time-JIT)
High inventory levels Inventory levels are
Inventory level (Raw, WIP, Finished) radically reduced.
 Cell production (Each
Assembly line flow (Each operator performs multiple
worker performs one operations – multi skilled
Production system function) operators)
Messy, cluttered and dirty Spotless shop floor with
Cleanliness shop floor visual management
Quality management
through inspection and management of quality
Quality management rework through prevention
Continuous changes to
Changes in production Infrequent changes in improve efficiency and
practice production practice productivity
Many layers of Fewer layers of
Management layer management management
Not exactly team based Strong team based
structure structure structure.