When you know your economic order quantity—which is the number of items that minimizes your overall cost—you can determine the number of orders you’ll place per year and the time between orders.
- [Lecturer] When you know your economic order quantity,…which is the number of items…that minimizes your overall cost,…you can determine the number of orders you'll place,…per year, and the time between your orders.…You can, then, use that information…to plan your inventory management…and order process effectively.…I'll demonstrate how to perform this analysis…using the OrdersPerYear workbook.…You can find that in the Chapter Four folder…of the Exercise Files collection.…In this workbook, I have information…about my setup cost, the flow rate,…which I have expressed in units per week,…and, also, the holding cost,…which is how much it costs to hold one item for one week.…
I use those values to calculate my economic order quantity…and that is in cell B6,…and you can see the formula, here.…I can use these values to calculate my demand per year,…the number of orders per year,…and then the number of days between orders.…I'll start with demand per year…which is a fairly straightforward calculation.…In cell E3, I will type an equal sign…
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- Drawing process flow diagrams
- Calculating process capacity
- Identifying bottlenecks
- Determining cycle time and idle time
- Calculating labor
- Calculating utilization
- Analyzing batch processes
- Calculating optimal order quantities