a. Determine the order quantity and reorder point. b. Determine the annual holding and order costs. c. Assume a price break of $60 per order was offered for purchase quantities of 2,300 units per order. If you took advantage of this price break, how much would you save annually?
a. Determine the order quantity and reorder point. b. Determine the annual holding and order costs. c. Assume a price break of $60 per order was offered for purchase quantities of 2,300 units per order. If you took advantage of this price break, how much would you save annually?
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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Question
a. Determine the order quantity and reorder point.
b. Determine the annual holding and order costs.
c. Assume a price break of $60 per order was offered for purchase quantities of 2,300 units per order. If you took advantage of this price break, how much would you save annually?
Transcribed Image Text:Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.
$ 11.00
$250.00
Standard deviation of weekly demand
Lead time
25 units
3 week
Item cost
Order cost
/order
% of item cost
Service probability
Annual holding cost (%)
Annual demand
21
95%
23,400
units
Average demand
468
/week
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