The optimal order quantity of cotton.

Question

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Answer 1

Question

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

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Answer 2

Question

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

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Answer 3

Question

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

Answer 6

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

Answer 7

Chapter 20, Problem 34OQ

a)

Summary Introduction

To determine: The optimal order quantity of cotton.

Answer 8

a)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the optimal order quantity of cotton:

Setup cost (S) is given as $100.

Total demand=3 colors×12 months×3,000 units×0.5 pound=54,000

Total purchasing cost=$2.5+$0.20=$2.70

Holding cost=2.70×20%=$0.54

Q=(2)(54,000)(100)0.54=4,472 pounds

Hence, the optimal order quantity of cotton is 4,472 pounds.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

b)

Summary Introduction

To determine: How frequently the firm should order.

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

Answer 13

b)

Summary Introduction

To determine: How frequently the firm should order.

Answer 14

b)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine how frequently the firm should order:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the firm would order 12.08 times a year and 0.99 times (12÷12.08) a month.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

Answer 19

c)

Summary Introduction

To determine: The time the firm should place the order when they need the order on April 1.

Answer 20

c)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the time the firm should place the order when they need the order on April 1:

It is given that the lead time is 2 weeks. Hence, the firm should order the cotton two weeks before in order to receive it on 1^st April. It is about March 15.

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

Answer 25

d)

Summary Introduction

To determine: The number of orders to be placed during the next year.

Answer 26

d)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the number of orders to be placed during the next year:

Number of orders per year=Total demandEOQ=54,0004,472=12.08

Hence, the number of orders to be placed during the next year is 12.08.

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

e)

Summary Introduction

To determine: The resulting annual holding cost.

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

Answer 31

e)

Summary Introduction

To determine: The resulting annual holding cost.

Answer 32

e)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual holding cost:

Annual holding cost=H×Q2=0.54×4,4722=$1,207 per year

Hence, the annual holding cost is $1,207.

Answer 33

e)

Expert Solution

Answer 34

e)

Expert Solution

Answer 35

Expert Solution

Answer 36

f)

Summary Introduction

To determine: The resulting annual ordering cost.

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

Answer 37

f)

Summary Introduction

To determine: The resulting annual ordering cost.

Answer 38

f)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the annual ordering cost:

Annual ordering cost=Number of orders×Ordering cost=12.08×100=$1,208

Hence, the annual ordering cost is $1,208.

Answer 39

f)

Expert Solution

Answer 40

f)

Expert Solution

Answer 41

Expert Solution

Answer 42

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.

Answer 43

g)

Summary Introduction

To determine: The way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders.

Answer 44

g)

Expert Solution

Explanation of Solution

Given information:

The monthly demand of each color (red, blue, and white) T-shirts is 3,000 units. 0.5 pounds of cotton is required for each shirt and the purchasing price is given as $2.50. transportation cost by sea is $0.20, the lead time is 2 weeks, ordering cost is $100, and the annual interest rate is 20 percent.

Determine the way the change in annual interest cost would influence the optimal batch size, average inventory, and an annual number of orders:

If the annual interest cost reduced to 5 percent, the holding cost would be lower. Hence, the batch size and average inventory would be larger and the number of orders would be smaller.