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For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?

For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?

Practical Management Science
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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For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?
Transcribed Image Text:For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?
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