The Friendly Greetings greeting card company outsources printing to a nearby printing shop, which charges a $1200 fixed charge to start producing a design of card, then $0.30 for each card produced. The printing shop turns around production orders quite quickly, so lead time can be considered negligible. Demand for birthday cards of a certain classic design has long been at a constant and steady rate of 25,000 cards per year. Friendly Greetings stores cards in its own warehouse. The company estimates holding costs to be 5 cents per card per year, including variable warehousing costs and the opportunity cost of capital. The company’s current ordering policy is not necessarily optimal. They place an order for 15,000 cards when their stock of cards approaches zero. Now suppose that the print shop requires a 2 week lead time to turn around a production order. What is the optimal reorder point for the card? (You may assume 50 weeks in a year.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
The Friendly Greetings greeting card company outsources printing to a nearby printing shop, which charges a $1200 fixed charge to start producing a design of card, then $0.30 for each card produced. The printing shop turns around production orders quite quickly, so lead time can be considered negligible. Demand for birthday cards of a certain classic design has long been at a constant and steady rate of 25,000 cards per year. Friendly Greetings stores cards in its own warehouse. The company estimates holding costs to be 5 cents per card per year, including variable warehousing costs and the opportunity cost of capital.
The company’s current ordering policy is not necessarily optimal. They place an order for 15,000 cards when their stock of cards approaches zero.
Now suppose that the print shop requires a 2 week lead time to turn around a production order. What is the optimal reorder point for the card? (You may assume 50 weeks in a year.)
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