Question 1
Because the EOQ model depends on the order quantity, it is said to be irrelevant to consider the fixed costs related to any inventory or order holding. The EOQ rises as a result of the assessment of set-up expenses using variable and fixed costs. A variable cost estimate is what is used when the set-up cost is solely assessed using variable expenses. Major mistakes in inventory levels are frequently made, especially when the operations managers don't handle the problems. The EOQ will always increase if the set-up costs are estimated based on fixed cost and the holding costs are on a pure variable cost basis (Wouters 33). Marketing will like this, and the stocks will seldom stock out. In the vice versa situation, the EOQs will always decrease in the market rather than like the stock out. In the event of estimating both the setup costs and holding costs on a fixed cost basis, the effects would always be minimal. The best way to make estimation on the EOQ variables is the use of pure variable cost approach.
Question 2
When coming up with schedules, it is necessary for managers to consider sequencing and the criteria they should use to evaluate schedules. Some of the criteria that can help the managers in the determination of schedules to employees, including process-focused performance, customer-focused due date and cost-based. The measurements of the criteria can be instrumental in keeping lateness and costs of goods or services to a minimum. Scheduling of the sequence of tasks to perform work on a product is vital for keeping costs down and lateness of completing tasks, jobs, projects, and even some services (Wouters 67). The intangible effect of scheduling and sequencing that a business may experience is an increase in the employee morale as well as an increase in the work-out. Another intangible effect that may be experienced is an increase in the consumer-satisfaction due to the shorter turnaround (flow) times.
Work Cited
Wouters, Marc. Cost Management. London [u.a.]: McGraw-Hill, 2012. Print.
