The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 50 cars per month. The cars cost $80 each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%. (a) Determine the economic order quantity and total annual cost (in $) under the assumption that no backorders are permitted. (Round your answers to two decimal places.) Q- 33.54 TC-1536 66 (b) Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost (in $) for the model racing cars. (Round your answers to two decimal places.) Q1525.50 TC $64878.66 X (c) What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300. days per year. (Round your answer to two decimal places.) 5.125 ✓days (d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain. Oves, the maximum wait is over a week long, but the cost savings of the backorder case is large enough to justify a long wait. O Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case. No, the maximum wait is less than a week but the EOQ case has a lower cost than the backorder case. O No, the maximum wait is over a week long, which does not justify the cost savings of the backorder case. No, the maximum wait is over a week long and the EOQ case has a lower cost than the backorder case. (e) if the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies? (Round your answers to two decimal places) EOQ FM 14.40 x X Backorder FM 3.10
The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 50 cars per month. The cars cost $80 each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%. (a) Determine the economic order quantity and total annual cost (in $) under the assumption that no backorders are permitted. (Round your answers to two decimal places.) Q- 33.54 TC-1536 66 (b) Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost (in $) for the model racing cars. (Round your answers to two decimal places.) Q1525.50 TC $64878.66 X (c) What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300. days per year. (Round your answer to two decimal places.) 5.125 ✓days (d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain. Oves, the maximum wait is over a week long, but the cost savings of the backorder case is large enough to justify a long wait. O Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case. No, the maximum wait is less than a week but the EOQ case has a lower cost than the backorder case. O No, the maximum wait is over a week long, which does not justify the cost savings of the backorder case. No, the maximum wait is over a week long and the EOQ case has a lower cost than the backorder case. (e) if the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies? (Round your answers to two decimal places) EOQ FM 14.40 x X Backorder FM 3.10
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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Transcribed Image Text:The A&M Hobby Shop carries a line of radio-controlled model racing cars. Demand for the cars is assumed to be constant at a rate of 50 cars per month. The cars cost $80
each, and ordering costs are approximately $15 per order, regardless of the order size. The annual holding cost rate is 20%.
(a) Determine the economic order quantity and total annual cost (in $) under the assumption that no backorders are permitted. (Round your answers to two decimal places.)
Q- 33.54
TC-$536.66
(b) Using a $45 per-unit per-year backorder cost, determine the minimum cost inventory policy and total annual cost (in $) for the model racing cars. (Round your answers
to two decimal places.)
Q=1525.50
TC $64878.66 X
(c) What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the Hobby Shop is open for business 300
days per year. (Round your answer to two decimal places.)
5.125
✓days
(d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain.
Oves, the maximum wait is over a week long, but the cost savings of the backorder case is large enough to justify a long
wait.
O Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case.
No, the maximum wait is less than a week but the EOQ case has a lower cost than the backorder case...
No, the maximum wait is over a week long, which does not justify the cost savings of the backorder case.
O No, the maximum wait is over a week long and the EOQ case has a lower cost than the backorder case.
(e) If the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies? (Round your answers to two decimal places.)
EOQ
14.40
F-
Backorder PM 3.18
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