Henry Crouch's law office has traditionally ordered inkrefills 60 units at a time. The firm estimates that carrying cost is 40%of the $ 10 unit cost and that annual demand is about 240 units peryear. The assumptions of the basic EOQ model are thought to apply.a) For what va lue of ordering cost would its action be optimal?b) If the true ordering cost turns out to be much greater than youranswer to (a), what is the impact on the firm's ordering policy?
Henry Crouch's law office has traditionally ordered inkrefills 60 units at a time. The firm estimates that carrying cost is 40%of the $ 10 unit cost and that annual demand is about 240 units peryear. The assumptions of the basic EOQ model are thought to apply.a) For what va lue of ordering cost would its action be optimal?b) If the true ordering cost turns out to be much greater than youranswer to (a), what is the impact on the firm's ordering policy?
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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| Henry Crouch's law office has traditionally ordered ink refills 60 units at a time. The firm estimates that carrying cost is 40% of the $ 10 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ model are thought to apply. a) For what va lue of ordering cost would its action be optimal? b) If the true ordering cost turns out to be much greater than your answer to (a), what is the impact on the firm's ordering policy? |
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