Rocky Mountain Tire Center sells 13,000 go-cart tires per year. The ordering cost for each order is $35, and the holding cost is 40% of the purchase price of the tires per year. The purchase price is $25 per tire if fewer than 200 tires are ordered, $19 per tire if 200 or more—but fewer than 8,000—tires are ordered, and $15 per tire if 8,000 or more tires are ordered.a) How many tires should Rocky Mountain order each time it places an order?Rocky Mountain's optimal order quantity is 8,000 units (enter your response as a whole number).b) What is the total cost of this policy?Total annual cost of ordering optimal order size = $ [blank] (round your response to the nearest whole number).

EOQ = √(2DS/H) Annual Holding cost = (Q*H)/2 Annual Setup cost = (D*S)/Q Annual purchase cost =…

Answered: a) How many tires should Rocky Mountain…

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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XYZ Pharmaceuticals sells COVID testing kits. Calculate the Economic Order Quantity, or EOQ, if annual demand is 20,000 testing kits, inventory storage costs average 20 percent, the unit price per kit is $50, and ordering costs are $25.
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has a demand of 6,000 units a year. The purchasing cost of each unit is $16 (additional 5% discount applies if at lease 150 units ordered a time), and the inventory carrying cost is $3 per unit per year. The average ordering cost is $10 per order. It takes about 3 working days for an order to arrive. (This is a corporate operation, and there are 300 working days per year.) Answer the following questions, Q1~Q5. Note that you must include Excel formulas/calculations showing how you arrive at the answer. Q1: Assume that the demand is consistent throughout the year. What is the ROP? Note that stockouts and unnecessary inventory holding should be avoided at any times. Q2: Assume that the demand is consistent throughout the year. Based on the EOQ model, to minimize the costs of purchasing, ordering and inventory holding…
A museum of natural history is having problems managing their inventories. Low inventory turnover is squeezing profit margins and causing cash-flow problems. A Class A item, a birdfeeder is also a top-selling item. See information for this item in the table below. Management has been ordering in lots of 390 units. 1) What is the annual cost of the current policy (hint: find the current total cost with the current order size, Q)? 2) What is the Economic Order Quantity or the optimum order quantity (EOQ) for the birdfeeders? 3) What is the total annual cost of ordering at the EOQ? How much could be saved if the museum ordered at the EOQ opposed to their current order size of 390 units? 4) When should the museum place an order, at how many units (i.e.: what is their reorder point or lead time demand)? Sales per week (demand) Purchase cost Order cost Annual holding cost Birdfeeder: Operating weeks per year Lead time for orders (weeks) Order size EOQ (calculated) 18 $ $ 60.00 45.00 25% of…
Matthew Liotine's Dream Store sells water beds and assorted supplies. His best-selling bed has an annual demand of 405 units. Ordering cost is $38; holding cost is $5 per unit per year. a) To minimize the total cost, how many units should be ordered each time an order is placed? EOQ = units (round your response to the nearest whole number). b) If the holding cost per unit was $6.00 instead of $5, what would the optimal order quantity be? New EOQ = units (round your response to the nearest whole number). A
Enter the formulas in the template. The numeric answers are to the right. Quantity Discount Template (Detailed Documentation) Discount Quantity Min. 1 50 90 125 150 200 Price 1,400 1,100 900 895 890 885 Demand = Carrying cost = Ordering cost = EOQ = Average Inventory Order per year = Total Cost = Quantity Ordered $200.00 $190.00 2,500 Total Cost Order Cost Order Cost (D/Q* Ordering Cost) Carry Cost Carry Cost (Q/2* Carrying Cost) Purchase Cost (D* Price) Quantity Discount Template (Detailed Documentation) Discount Quantity Min. 1 50 90 125 150 200 Price 1,400 1,100 900 895 890 885 Demand = Carrying cost = Ordering cost = EOQ = Average Inventory Order per year = Total Cost = Quantity Ordered 72.5 72.5 90.0 125.0 150.0 200.0 $200.00 $190.00 2,500 72.5 36.3 2.8 $13,784.05 Order Cost $6,892 Total Cost $ 293,784.05 $ 233,784.05 $ 194, 105.56 $ 194,875.00 $ $ 198,500.00 $2,500.00 Order Cost (D/Q* Ordering Cost) $6,892.02 $6,892.02 $5,555.56 $4,000.00 195,583.33 $3,333.33 Carry Cost $6,892…
Abey Kuruvilla, of Parkside Plumbing, uses 1,250 of a certain spare part that costs $26 for each order, with an annual holding cost of $27. a) Calculate the total cost for order sizes of 25, 40, 50, 60, and 100 (round your responses to two decimal places). b) What is the economic order quantity? units (round your response to two decimal places).
Annual demand (D) is 49,000 units. Ordering Cost (S) is $1,000 per order. Holding cost (H) is $2 per unit per year. Find economic order quantity (Q*). 7,000 units 49,000,000 units 4,950 units 3,500 units 4,083 units
If Sarah wants to minimize inventory holding and ordering costs, how much Palm oil should she purchase with each order (in kgs)?
The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase $550 order Relevant carrying costs per year for each package: Required annual return on investment Required other costs per year 17% $7 Annual demand is 30,000 packages per year. The purchase price per package is $53. Which of the following statements is true of Allianz's EOQ system costs? O At EOQ, the annual relevant ordering costs is exactly the half of annual relevant carrying costs. O At EOQ, the annual relevant carrying costs is exactly the half of the annual relevant total costs. O At EOQ, the annual relevant carrying costs is higher than the annual relevant ordering costs. O At EOQ, the annual relevant carrying costs is equal to the annual relevant total costs.
1. What is the economic order quantity for BBE in units? In pounds? 4.What is the total cost for using air carrier transportation?
The Hodson Gallery and Art Museum distributes a printed guide for its visitors. There are about 18000 visitors per year. Holding costs for the brochures are 20% and it costs $30 to place an order with the printer. A. Assuming the cost for each guide is $2.50, how many should be printed at a time? B. Now assume the printer has offered the following discount schedule: Category Order Size Unit Cost 1 0 - 1499 $2.50 2 1500 - 2999 $2.20 3 3000 and over $1.80 Now how many brochures should be printed at a time?

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