A department store sells 10,000 pairs of pants per year. The store orders pants from a regionalwarehouse. Each time an order is placed, an ordering cost of $45 is incurred. The store pays $50for each pair of pants, and the cost of holding $1 worth of inventory for a year is estimated to bethe annual capital opportunity cost of 200. The department store believes that orders can bebacklogged at the cost of s = $15 per pair per year. DetermineA. The optimal order quantity.B. The maximum inventory level that will occur.C. The maximum shortage that will occur.%3D

Given, Demand, d=10000 pairs Ordering cost,o=$45 Holding cost,h= $1 Backorder cost,b=$15 a) The…

Answered: A department store sells 10,000 pairs…

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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ESTRELLA is a bike retailer located in the outskirts of Bacolod City. ESTRELLA purchases bikes from STORAGEHUB in orders of 250 bikes which is the current economic order quantity. STORAGEHUB is now offering the following bulk discounts to its customers: Price 0% discount on orders less than 499 P3,500 10% discount on orders above 500 units - 999 3,150 15% discount on orders above 1,000 units 2,975 ESTRELLA is wondering if the EOQ model is still the most economical and whether increasing the order size would actually be more beneficial. Following information is relevant to forming the decision: Annual demand is 5000 units Ordering cost is $100 per order Annual holding cost is 25% QTY SETUP HOLDING PROODUCT COST TOTAL COST Q1 25423.73 25812.5 what is the product cost what is the total cost Q2 3000 198437.5 what is…
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