Page 197 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes Appendix 4: Receipt Frequency of Gunny Bags in 1991 (No. of
Days in Transit taken from date of R/R till the date of Receipt at Works)
Instances of No. of Days in Transit

Months No.of 10 days 11 days 12 days 13 days 14 days 15 days
Trucks
Received
January 42 2 2 35 3 - -
February 26 2 3 16 5 - -
March 57 3 3 47 4 - -
April 52 - 4 40 4 2 2
May 20 - 3 12 2 1 2
June 24 - 4 16 3 1 -
July 61 - 9 46 4 1 1
August 33 - 2 26 3 1 1
September 37 - 7 25 3 1 1
October 26 2 5 13 5 - 1
November 22 3 2 13 3 1 -
December 23 1 2 17 3 - -
Total 423 13 46 306 42 8 8
Average No. of days in transit = (13*10*11+306*12+42*13+8*14+8*15) / 423

= (130+506+3672+546+112+120) /423
= 5086/423 = 12.02 Say 12 days.
Appendix 5: Computation of Ordering Cost
Purchase Department, New Delhi, has furnished the following information in connection
with the Purchase orders released both from Delhi and Plant Office as also the establishment
charges for both the places:

A. No. of Orders Released:
(a) From New Delhi 13210 Nos.
(b) From PLANT 806 Nos
Total 2126 Nos.
B. In addition to the above, one order per month is released for Coal and two orders
per month for Diesel.
C. Total no. orders released would be:
(a) No. of orders from Delhi & PLANT 2126 Nos.
(b) No. of orders from Coal 12 Nos.
(c) No. of orders for Diesel 24 Nos.
Total 2162 Nos.

D. Establishment Costs of Purchase Department at Head Office & PLANT Office
(Based on the information furnished by Manager (Accounts)), New Delhi = ` 16
lakhs
E. Ordering Cost ` 16 lakhs / 2162 = ` 740 per order.

Contd...

192 LOVELY PROFESSIONAL UNIVERSITY