Given Information Service Level - 95% (z value= 1.6649) Order Cost - $125 Order Cycle (weeks) - 4, 5, 6, 7, 8 Lead Time (weeks) - 2 weeks Operating Time - 52 weeks Standard deviation = 69.3237 Variable Holding Cost - 12.019% Fixed Holding Cost - 1,659,317.307 QUESTION: Compute for annual variable holding cost. Formula Given: (EOQ/2) x (Unit cost x Percentage Value of Inventory)
Given Information Service Level - 95% (z value= 1.6649) Order Cost - $125 Order Cycle (weeks) - 4, 5, 6, 7, 8 Lead Time (weeks) - 2 weeks Operating Time - 52 weeks Standard deviation = 69.3237 Variable Holding Cost - 12.019% Fixed Holding Cost - 1,659,317.307 QUESTION: Compute for annual variable holding cost. Formula Given: (EOQ/2) x (Unit cost x Percentage Value of Inventory)
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
Given Information
Service Level - 95% (z value= 1.6649)
Order Cost - $125
Order Cycle (weeks) - 4, 5, 6, 7, 8
Lead Time (weeks) - 2 weeks
Operating Time - 52 weeks
Standard deviation = 69.3237
Variable Holding Cost - 12.019%
Fixed Holding Cost - 1,659,317.307
QUESTION:
Compute for annual variable holding cost.
Formula Given:
(EOQ/2) x (Unit cost x Percentage Value of Inventory)
Transcribed Image Text:Week
Demand
Week
Demand
1
519
27
519
2
614
28
461
469
29
458
4
473
30
632
460
31
436
6
610
32
516
7
472
33
608
8
478
34
525
610
35
619
10
479
36
580
11
421
37
623
12
566
38
376
13
697
39
394
14
463
40
454
15
565
41
659
16
481
42
581
17
538
43
623
18
511
44
483
19
506
45
434
20
523
46
534
21
529
47
493
22
467
48
471
23
535
49
514
24
551
50
507
25
460
51
558
26
449
52
536
TOTAL
27,040
Figure 1.1 Weekly Demand for BWC Product
Transcribed Image Text:Calculations:
To get the annual ordering cost, we need to compute for the number of
orders per cycle.
No. of Order per cycle:
Order Cycle No. of Order
4.
13
Operating time = 52 weeks
10.4
Order Cycle = 4, 5, 6, 7, 8 weeks
6.
8.6666
Formula:
7
7.4285
6.5
= Operating time / Order Cycle
Annual Ordering Cost:
Order Cycle Annual Ordering Cost
Order Cost = $125
4
1,625
1,300
Formula:
6
1,083.33
= Order Cost x No. of Order per cycle
7
928.5625
8
812.5
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