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Operations Management Principles IP 4
Essay specific features
Written by:
Samantha O
Date added:
February 10, 2014
Level:
University
Grade:
A
No of pages / words:
3 / 783
Was viewed:
1479 times
Rating of current essay:
Essay content:
The larger each order quantity, the fewer the number of orders placed in a year and hence, the lower the annual ordering cost. However large order quantities lead to higher levels of inventory and therefore higher annual inventory holding costs. Unfortunately, the ordering cost is incurred by the purchase department and the inventory holding cost by the operations department...
displayed 300 characters
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The director of purchasing is reducing his department??s cost (by having a large order quantity) while increasing the operation department??s cost. (Stevenson, 2007)
Both departments should be working towards minimizing the total cost to the company. Hence, the economic order quantity (EOQ) should be determined such that the total cost to the company is minimized...
displayed 300 characters
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