1) To order less than 2,000 the vendor quotes $1.80 per piece. Orders between 2001 to 5,000 are$1.60 per piece and 5,001-10,000 it's $1.40. Any orders above 10,000 the price drops to $1.25.Ordering costs are $200 per order and to store the materials we have a 5% storage costs from UCcatering. Our estimated annual demand is 15,000 pieces.If we contract to place orders annually with the vendor for 10,001 pieces each time to get the S1.25price, what is my total cost for the year?2) To order less than 2,000 the vendor quotes $1.80 per piece. Orders between 2001 to 5,000 areS1.60 per piece and 5,001-10,000 it's S1.40. Any orders above 10,000 the price drops to $1.25.Ordering costs are $200 per order and to store the materials we have a 5% storage costs from UCcatering. Our estimated annual demand is 15,000 pieces.What is the optimal Order Qty ?

1. Given, Annual demand, d= 15000 pieces Ordering cost, o =$200 Inventory holding cost…

Answered: 1) To order less than 2,000 the vendor…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Peter Sagan is in charge of maintaining hospital supplies at Champs Hospital. During the past year the mean weekly demand for a special type of tubing was 186 packages of this tubing with a standard deviation of 13 packages of tubing. The lead time for receiving this tubing from the supplier is 1.5 weeks. Peter would like to maintain a 95% service level and places an order for 750 packages every time an order is placed. d) If the weekly demand is 186 and there is a 1.5 week lead time - what is the reorder point (99% service level)? e) If the carrying cost per year is $0.50/unit/year - what is the additional cost associate with the 99% service level compared to 95% service level (i.e. cost of safety stock at 99% level - cost of safety stock at 95% service level)?
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