6 The local technology store Wired In hired you to manage their inventory, which wwwww consists of 2 products configurations, type L and type J. Below are the data for the products. The holding cost is 24% of the unit costs. Product Demand per year D Unit Cost C Ordering Cost A Type L 48000 (units) $50 $125/order Type J 72000 (units) $85 $125/order A. Use the economic order quantity model to determine the order size for products Type L and Type J (assuming they are ordered independently). B. Calculate the total relevant cost associated with the EOQ calculated in part (A) (for Type L and Type J). C. Assume that the real ordering cost is $200 instead of $125. How large are the additional relevant costs incurred by the bad estimate of the ordering cost for Type J? D. If WiredIn chooses to order 1300 of Type L instead of the EOQ, calculate the percentage cost error of this order size.
6 The local technology store Wired In hired you to manage their inventory, which wwwww consists of 2 products configurations, type L and type J. Below are the data for the products. The holding cost is 24% of the unit costs. Product Demand per year D Unit Cost C Ordering Cost A Type L 48000 (units) $50 $125/order Type J 72000 (units) $85 $125/order A. Use the economic order quantity model to determine the order size for products Type L and Type J (assuming they are ordered independently). B. Calculate the total relevant cost associated with the EOQ calculated in part (A) (for Type L and Type J). C. Assume that the real ordering cost is $200 instead of $125. How large are the additional relevant costs incurred by the bad estimate of the ordering cost for Type J? D. If WiredIn chooses to order 1300 of Type L instead of the EOQ, calculate the percentage cost error of this order size.
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...
Related questions
Question
![6 The local technology store WiredIn hired you to manage their inventory, which
consists of 2 products configurations, type L and type J. Below are the data for the products.
The holding cost is 24% of the unit costs.
Product
Demand per year D
Unit Cost C
Ordering Cost A
Type L
48000 (units)
$50
$125/order
Type J
72000 (units)
$85
$125/order
A. Use the economic order quantity model to determine the order size for products
Type Land Type J (assuming they are ordered independently).
B. Calculate the total relevant cost associated with the EOQ calculated in part (A)
(for Type L and Type J).
C. Assume that the real ordering cost is $200 instead of $125. How large are the
additional relevant costs incurred by the bad estimate of the ordering cost for Type J?
D. If WiredIn chooses to order 1300 of Type L instead of the EOQ, calculate the
percentage cost error of this order size.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F86c8dcbb-d46d-4c91-a740-ef32ebf33ae0%2F917120df-bee2-47e9-af97-c7c680e19db6%2Fmkfle9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6 The local technology store WiredIn hired you to manage their inventory, which
consists of 2 products configurations, type L and type J. Below are the data for the products.
The holding cost is 24% of the unit costs.
Product
Demand per year D
Unit Cost C
Ordering Cost A
Type L
48000 (units)
$50
$125/order
Type J
72000 (units)
$85
$125/order
A. Use the economic order quantity model to determine the order size for products
Type Land Type J (assuming they are ordered independently).
B. Calculate the total relevant cost associated with the EOQ calculated in part (A)
(for Type L and Type J).
C. Assume that the real ordering cost is $200 instead of $125. How large are the
additional relevant costs incurred by the bad estimate of the ordering cost for Type J?
D. If WiredIn chooses to order 1300 of Type L instead of the EOQ, calculate the
percentage cost error of this order size.
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