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year. a. - Calculate the Economic Order Quantity (EOQ), Annual Ordering Cost, Annual Holding Cost and Total Annuarinventory Cost under unfavorable and favorable market conditions. b. - The Purchasing & Warehousing Manager identified two improvement projects in conjunction with her team: Project A: Reduction of ordering cost to $18.00. Project B: Reduction of holding cost to $1.40 per unit per year. Which project would result in greater reduction of the EOQ and Total Annual Inventory Cost? Which of the projects would you recommend and why? Show all your calculations.

year. a. - Calculate the Economic Order Quantity (EOQ), Annual Ordering Cost, Annual Holding Cost and Total Annuarinventory Cost under unfavorable and favorable market conditions. b. - The Purchasing & Warehousing Manager identified two improvement projects in conjunction with her team: Project A: Reduction of ordering cost to $18.00. Project B: Reduction of holding cost to $1.40 per unit per year. Which project would result in greater reduction of the EOQ and Total Annual Inventory Cost? Which of the projects would you recommend and why? Show all your calculations.

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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04/30/2 Problem #1 - Jasper Inc., a company that sells air conditioning units for cars intends to reduce its total annual inventory cost. The annual demand is expected to be 6,000 units if market conditions are unfavorable, and 9,000 units if market conditions are favorable. The Purchasing & Warehousing Manager estimates that the ordering cost is $20.00 per order and the holding cost is $2.00 per unit per year. a. - Calculate the Economic Order Quantity (EOQ), Annual Ordering Cost, Annual Holding Cost and Total Annuarinventory Cost under unfavorable and favorable market conditions. b. - The Purchasing & Warehousing Manager identified two improvement projects in conjunction with her team: Project A: Reduction of ordering cost to $18.00. Project B: Reduction of holding cost to $1.40 per unit per year. Which project would result in greater reduction of the EOQ and Total Annual Inventory Cost? Which of the projects would you recommend and why? Show all your calculations.
Transcribed Image Text:04/30/2 Problem #1 - Jasper Inc., a company that sells air conditioning units for cars intends to reduce its total annual inventory cost. The annual demand is expected to be 6,000 units if market conditions are unfavorable, and 9,000 units if market conditions are favorable. The Purchasing & Warehousing Manager estimates that the ordering cost is $20.00 per order and the holding cost is $2.00 per unit per year. a. - Calculate the Economic Order Quantity (EOQ), Annual Ordering Cost, Annual Holding Cost and Total Annuarinventory Cost under unfavorable and favorable market conditions. b. - The Purchasing & Warehousing Manager identified two improvement projects in conjunction with her team: Project A: Reduction of ordering cost to $18.00. Project B: Reduction of holding cost to $1.40 per unit per year. Which project would result in greater reduction of the EOQ and Total Annual Inventory Cost? Which of the projects would you recommend and why? Show all your calculations.
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