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 $70 each, and ordering costs a approximately $15 per order, regardless of the order size. The annual holding cost rate is 20% (e) 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" TC $ 530 00 X (b) Using a $45 per unit per year backorder cost, determine the minimum cost inventory policy and total annual cost (in 5) for the model racing cars. (Round your answers to two decimal places) Q-1024 TC-$400 93 x X (0) 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 s to two decimal places) 612 x days (d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain O Yes, the maximum wait is ever a week long, but the cost savings of the backorder case is large enough to justify a long wait. Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case. No, the maximum wat is over a week long and the EOQ case has a lower cost than the backorder case O No, the maximum wat is over a week long, which does not justdy the cost savings of the backorder case O No, the maximum war is less than a week but 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) LOQ 7-1 Backorder -178
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 $70 each, and ordering costs a approximately $15 per order, regardless of the order size. The annual holding cost rate is 20% (e) 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" TC $ 530 00 X (b) Using a $45 per unit per year backorder cost, determine the minimum cost inventory policy and total annual cost (in 5) for the model racing cars. (Round your answers to two decimal places) Q-1024 TC-$400 93 x X (0) 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 s to two decimal places) 612 x days (d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain O Yes, the maximum wait is ever a week long, but the cost savings of the backorder case is large enough to justify a long wait. Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case. No, the maximum wat is over a week long and the EOQ case has a lower cost than the backorder case O No, the maximum wat is over a week long, which does not justdy the cost savings of the backorder case O No, the maximum war is less than a week but 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) LOQ 7-1 Backorder -178
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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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 $70 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-3354
TC- $ 500 00
X
(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-1024
x
x
TC-$400.93
(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 y
to two decimal places)
5.12
x days
(d) Would you recommend a no-backorder or a backorder inventory policy for this product? Explain
O Yes, the maximum wait is ever a week long, but the cost savings of the backorder case is large enough to justify a long
Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case
O No, the maximum wall is over a week long and the EOQ case has a lower cost than the backorder case
O No, the maximum wat is over a week long, which does not justify the cost savings of the backorder case
O No, the maximum wat is less than a week but the EOQ case has a lower cost than the backorder case.
(e) If the lead time is six days, what is the rearder point for both the no-backorder and backorder inventory policies? (Round your answers to two decimal places)
EOQ
r12
Backorder
-5.75
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