EMMICO: How to Establish Economic Order Quantity

by: Prakash Sathe

Publication Date: August 15, 2016
Length: 6 pages
Product ID#: 1-430-490

Core Disciplines: Economics, Information - Technology & Management, Operations Management/Supply Chain

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Teaching Note

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EMMICO has just acquired Franz Kuerten and is trying to integrate its Vienna plant operations. The problem is the company is storing too much inventory at the plant and its off-site warehouse — up to five times the amount it needs for regular production. To hit the inventory sweet spot, student interns from the Tauber Institute for Global Operations at the University of Michigan are tasked with using two models to calculate economic order quantity. They will have to report their findings in a week.

Teaching Objectives

After reading and discussing the material, students should:

  • Examine the case problem using the continuous review model.
  • Provide a solution to the case problem using the up-to-a-level model.
  • Determine which is the best solution.