Acompany uses 2,000 units of a product each year(constant usage). The product is purchased from asupplier at a unit cost of $4; however, the companymust pay the freight from the splir's plant, Each unitweighs 5 pounds; the shpping cost is 20 cents perpound. The company estimates the ordrprocessgcost is $25 per order; inventory holding costs are 20percent per dollar per year.1. Find the optimal order quantity,2. Suppose that for shipments above 300 poundsbut less than 10,000 pounds, a flat charge of $50per shipment (not per pound) is charged, while forshipments below 300 pounds that rate remains at20 cents per pound. Now, what order quantityshould be used to minimize the sum of all relevantvariable costs?

Given, Annual demand = 200 units Unit cost, u = $4 + (5×20) = $5 Ordering cost, o = $25 Inventory…

Answered: Acompany uses 2,000 units of a product…

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...

See similar textbooks

Similar questions

Pizza Hut purchases its pizza delivery boxes from a printing supplier. Pizza Hut delivers on average 350 pizzas each month (assume deterministic demand). Boxes cost 41 cents each, and each order costs $15.50 to process. Because of limited storage space, the manager wants to charge inventory holding at 21 percent of the cost. The lead time is 5 days. Use the EOQ Model Excel template in to determine the economic order quantity.
A store sells university coffee mugs. Daily demand is 25 mugs with a standard deviation of 4 mugs per day. Each mug costs $7.85. Ordering costs are $11. The carrying costs are $2 per year. The store is open 250 days per year. Lead time is 6 days with a standard deviation of 1.6 days. Desired service level is 98%. Calculate the EOQ (round your answer to the nearest whole number) 2. CAREFUL! YOUR NUMBERS HAVE CHANGED A store sells university logo hats. Daily demand is 22 hats with a standard deviation of 4 hats per day. Each hat costs $7.85. Ordering costs are $12. The carrying costs are $1 per year. The store is open 250 days per year. Lead time is 4 days with a standard deviation of 1.6 days. Desired service level is 98%. Calculate the ROP with safety stock.
A medical equipment has an average monthly demand is 134 units. Its unit cost is $385. It costs $486 to place an order, and the inventory carrying cost is $44 per unit per year. The equipment requires a 95% of service level with a safety stock requirement of 20 units. What is the equipment's minimum annual total inventory cost?
Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 290 per day, and it uses these subcomponents at a rate of 12,700 per year (of 250 working days). Holding costs are $2 per item per year, and ordering costs are $31 per order. a) What is the economic production quantity? 690.88 units (round your response to two decimal places). b) How many production runs per year will be made? 18.38 production runs (round your response to two decimal places). c) What will be the maximum inventory level? 569.86 units (round your response to two decimal places). d) What percentage of time will the facility be producing components?% (enter your response as a percentage rounded to two decimal places).
Can someone please help me with the folowing problems on excel with the formulas. Thank you
Manipulation Manufacturing Company uses 1,000 units of Chip annually in its production. Order costs consist of P10 for placing a long-distance call to make the order and P40 for delivering the order by truck to the company warehouse. Each Chip costs P100 and the carrying costs are estimated at 15.625% of the inventory cost. If the EOQ for Chip is 80 and the total ordering cost is P625. Compute for the Total Carrying Costs.
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,200 units. Southeastern estimates its annual holding cost for this item to be 323 per unit. The cost to place and process an order from the supplier is $73. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number). b) What are the annual holding costs? $ (round your response to the nearest whole number) c) What are the annual ordering costs? S (round your response to the nearest whole number). d) What is the reorder point? units (round your response to the nearest whole number).
Question 1 For supply item ABC, Andrews Company has been ordering 400 units per week. A new purchasing agent has been hired by the company who wants to start using the economic-order- quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units Lead time, in days Ordering costs Insurance and handling costs Purchase price per unit Return on cash investment 20,800 5 $22 $7 $15 15% Required
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,500 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $78. The company operates 300 days per year, and the lead time to receive an order from the supplier is 3 working days. a) What is the economic order quantity? units (round your response to the nearest whole number). (round your response to the nearest whole number). b) What are the annual holding costs? $ c) What are the annual ordering costs? $ (round your response to the nearest whole number). d) What is the reorder point? units (round your response to the nearest whole number).
Annual demand for a product is 11,960 units; weekly demand is 230 units with a standard deviation of 50 units. The cost of placing an order is $125, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.80 per unit. To provide a 98 percent service probability, what must the reorder point be? Suppose the production manager is told to reduce the safety stock of this item by 125 units. If this is done, what will the new service probability be?
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
Ross White’s machine shop uses 2500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or10% of the unit cost) and the ordering cost is $18.75. There are 250 working days per year. Upon hearing that Ross White is considering the producing the brackets in-house, the supplier has notified Ross that the purchase price would drop from $15 per bracket to $14.50 per bracket if Ross purchase the brackets in lots of 1000. After analyzing the cost of the various options for obtaining the brackets, Ross White recognizes that although he knows the lead time is 2 days, the average daily demand usually varies. Ross has kept careful records and has determined that the average daily demand is normally distributed with a standard deviation of 2.5 units. If Ross would like to maintain a service level of 90 %,…

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Business in Action

Operations Management

ISBN:

9780135198100

Author:

BOVEE

Publisher:

PEARSON CO

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

Production and Operations Analysis, Seventh Editi…

Operations Management

ISBN:

9781478623069

Author:

Steven Nahmias, Tava Lennon Olsen

Publisher:

Waveland Press, Inc.

SEE MORE TEXTBOOKS