XYZ company has determined that the annual demand for type A material is 20,000 pounds. Salma, whoworks in her brother's factory, is in charge of purchasing. She estimates that it costs $15 every time anorder is placed. This cost includes her wages, the cost of the forms used in placing the order, and so on.Furthermore, she estimates that the cost of carrying one pound in inventory for a year is 0.05 $.Assume that the demand is constant throughout the year. (Note: $ is a dollar sign)a) If we are going to use the EOQ inventory model, mention all the assumptions that are made tovalidate that model.b) How many pounds of type A material should Huda order (i.e. Q*) at a time if she wishes to minimizetotal inventory cost?c) How many orders per year would be placed?d) What would the annual ordering cost be?e)What would the average inventory be?f) What would the annual holding cost be?See equations below if needed:AnnualOrderingcostAnnualhdding:Number oforders placedper yearAnnual demandNumber of unitsin each orderAverageinventoryOrdering costper orderOrdering costper order(Carrying costper unit=b.co

For this question, the following data are given, The annual demand is 20000 pounds The ordering…

Answered: a) If we are going to use the EOQ…

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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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…

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a) If we are going to use the EOQ inventory model, mention all the assumptions that are made to validate that model. b) How many pounds of type A material should Huda order (i.e. Q*) at a time if she wishes to minimize total inventory cost? c) How many orders per year would be placed?