Leilani Lavender's law office has traditionally ordered ink refills 60 units at a time. The firm estimates that carrying cost is 40% of the $10.00 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ modelare thought to apply.a) For what value of ordering cost would its action be optimal?Its action would be optimal given an ordering cost of $per order (round your response to two decimal places).b) If the true ordering cost turns out to be much greater than your answer to part (a), what is the impact on the firm's ordering policy?A. The order quantity should be increased.B. The order quantity should not be changed.C. The order quantity should be decreased.

Answered: Image /qna-images/answer/c283dc8f-ad7f-4978-832d-12bfe7e55b60.jpg

Answered: a) For what value of ordering cost…

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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If D = 8,500 per month, S = $42 per order, and H= $2.50 per unit per month, a) What is the economic order quantity? The EOQ is b) How does your answer change if the holding cost doubles? The EOQ is units (round your response to the nearest whole number). The EOQ is units (round your response to the nearest whole number). c) What if the holding cost drops in half? units (round your response to the nearest whole number).
What are order cycle costs if annual demand is 10,900 units, the order quantity is 1,800 units, and annual order cost is $140? What if the order size changes to 900 units or 10,900 units? Round your answers to the nearest cent. If the order quantity is 1,800 units, the order cycle costs are $ . If the order quantity is 900 units, the order cycle costs are $ . If the order quantity is 10,900 units, the order cycle costs are $ .
11.5 If sigma is 150 units, and the demand during the lead time is 200 units, calculate the safety stock and order point for: a. A 50% service level. b. An 85% service level.
44 Which of these statements about the production order quantity model is FALSE? Select one: a. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. b. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. c. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. d. Average inventory is less than one-half of the production order quantity. e. None of the above is false.
Assuming Normal Distribution, what would the optimal (s,Q) policy be for the given parameters below? Given data: Demand daily has mu = 1768, sigma = 5.37, with a unit purchased cost is $15 (annual interest rate is 20%). The order cost is $50 with a back ordering cost of $25. The order lead time is 3 days.
A manufacturer’s annual demand is 6000 units. The current units per order is $100. The setup cost is $50 per order and the holding cost is $7 per unit. The cost per unit is $2.50. The Number of work days is 250 per year. What is the annual setup cost? What is the annual holding cost? What is the optimal order quantity (EOQ)? Using the EOQ, how many orders should be placed per year? What is the interval between orders? What is the inventory administration cost? What is the total cost of inventory?
Items purchased from a vendor cost $250 each, and the forecast for next year’s demand is 2,000 units. The optimal order size is 100. The firm operates 52 weeks next year and lead time is 3 weeks. It costs $5 every time an order is placed for more units, and the storage cost is $2 per unit per year. What is the number of orders per year? a.35 b.20 c.22 d.25 e.5

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