operation management Essay

Ordering problem
There are three inventory models to solve the problems concerning about when to order and how much to order. Firstly, the basic economic order quantity model which is based on demand for an item, reasonably constant; lead time, the time between placement and receipt of the order; receipt of inventory, the inventory from an order arrives in one batch at one time; variable costs, the costs of setting up and the cost of holding inventory over time; stock outs is in order to minimize the total of ordering and holding costs. A benefit of the EOQ model is robust model which determines accurate ordering cost and holding cost for inventory. Due to the robust model, we can determine that the recorder point for New Moon Furniture store is expected demand during lead time plus safety stock. And the expected time between orders is number of working days per year divide by expected numbers of orders. Thus, New Moon Furniture store can solve the inventory problem related to small inventory level and too much stocking on hand based on EOQ model. Secondly, there is a model called the production order quantity model Thirdly, the quality discount model is simply a reduced price for an item when it is purchased in large quantities. Many companies offer quantity discount to their customers in order to increase sales.

Maintenance
In order to solve the problem of maintenance in the New Moon Furniture store, there are three models can be implemented. Firstly, the model of preventive maintenance implies that it can be determined when a system needs service or will need repair. Just like the Orlando Utilities Commission that supply power to two central Florida countries accomplish preventive maintenance via a computerized maintenance management program efficiently. Furthermore, the computer generates preventive maintenance work orders and lists of required materials. According to the report for OUC, every day that a plant is down for maintenance costs OUC about $110,000 extra for the replacement cost of power that must be generated elsewhere. However, these costs pale beside the costs associated with a forced outage. An unexpected outage could cost OUC an additional $350,000 to $600,000 each day. (Jay and Barry, 1988) At OUC, preventive maintenance is worth its weight in gold. For New Moon Furniture, relevant staff should involve routine inspections for the

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