5 Example 90. A company finds that the demand for an item is uniform at 10,000 units peryear. It costs 50 each time to place an order, regardless of the quantity order. If the holdingcost is ? 1 per unit per year, find the economic order quantity.

Economic Order Quantity is the quantity of an item ordered such that its total inventory costs are…

Answered: Example 90. A company finds that the…

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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CU Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price break and other data for the problem. Price copper $ .81 per pound up to 2,499 pounds .80 2,500-4,999 pounds .78 5,000 pound or greater Annual demand 51,000 pounds per year Holding cost 30 % per unit/yr. Of the price of copper Ordering cost $ 30 Which quantity should be ordered?
Bulldogs Inc. expects to use 48,000 boxes of chocolate per year costing P12 per box. Inventory carrying cost is equal to 20% of the purchase price. The company uses its inventory at a constant rate. The lead time for placing the order is 3 days, and Bulldogs Co. holds 2,400 boxes of paint as safety stock. If the company orders 2,000 boxes of chocolate per order, what is the cost of carrying inventory? A. P8,160 B. P5,280 C. P5,760 D. P2,400
5. A product has an average daily demand of 400 units with standard deviation of 10.0 units. Lead-time is 1 day. If management would like to satisfy all demand in 80% of the cycles, what is the reorder point? 6. A product sells for $24 per unit and costs the retailer $12 per unit, unsold units by the end of the season are salvaged for $7.0. Demand is normally distributed with a mean of 1000 units and standard deviation of 100 units. How many units should the retailer order? 7. A product sells for $24 per unit and costs the retailer $12 per unit, unsold units by the end of the season are salvaged for $9.0. Demand is normally distributed with a mean of 1000 units and standard deviation of 100 units. How many units should the retailer order?
Item X is a standard item stocked in a company’s inventory of component parts. Each year, the firm, on a random basis, uses about 2,000 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of averageinventory. Every time an order is placed for more of item X, it costs $10.a. Whenever item X is ordered, what should the order size be?b. What is the annual cost for ordering item X?c. What is the annual cost for storing item X?
A company stocks an SKU with a weekly demand of 600 units and a lead time of4 weeks. Management will tolerate one stockout per year. If sigma for the lead timeis 100 and the order quantity is 2500 units, what is the safety stock, the averageinventory, and the order point?
Furnco sells secretarial chairs. Annual demand isnormally distributed, with mean of 1,040 chairs and standarddeviation of 50.99 chairs. Furnco orders its chairs from itsflagship store. It costs $100 to place an order, and the leadtime is two weeks. Furnco estimates that each stockoutcauses a loss of $50 in future goodwill. Furnco pays $60 foreach chair and sells it for $100. The annual cost of holdinga chair in inventory is 30% of its purchase cost.a Assuming that all demand is backlogged, what arethe reorder point and the safety stock level? b Assuming that all stockouts result in lost sales, de-termine the optimal reorder point and the safety stock level.
A hospital must order the drug Porapill from DaisyDrug Company. It costs $500 to place an order and $30 toreview the hospital’s inventory of the drug. Annual demandfor the drug is N(10,000, 640,000), and it costs $5 to holdone unit in inventory for one year. Orders arrive one monthafter being placed. Assume that all shortages are backlogged.a Estimate R and the number of orders per year thatshould be placed.b Using the answer in part (a), determine the optimal(R, S) inventory policy. Assume that the shortage costper unit of the drug is $100.
39) please help me with this Item X Is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2.700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $5 per unit of average inventory. Every time an order is placed for more of item X, it costs $20 c. What is the annual cost for storing item X? Note: Round your order quantity to the nearest whole number and your final answer to 2 decimal places.
A company has a chance to reduce their inventory ordering costs by placing larger quantity orders using the discount schedule below. What should their optimal order quantity be if this company purchases this single inventory item with an e-mail ordering cost of $4, an annual holding cost rate (per unit) of 2% of the price/unit, and an annual demand of 10,000 units? Order quantity (units) Price/unit ($) 0 to 2,499 1.20 2,500 to 3,999 1.00 4,000 or more 0.98
David's Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is pretty steady at 175 per month. The salamis cost Gold $1.85 each. The fixed cost of calling his brother in New York and having the salamis flown in is $200. It takes three weeks to receive an order. Gold's accountant, Irving Wu, recommendsan annual cost of capital of 22 percent, a cost of shelf space of 3 percent of the value of the item, and a cost of 2 percent of the value for taxes and insurance. How many salamis should Gold have on hand when he phones his brother to send another shipment?
David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimates that the demand for the salamis is pretty steady at 175 per month. The salamis cost Gold $1.85 each. The fixed cost of calling his brother in New York and having the salamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelf space of 3 percent of the value of the item, and a cost of 2 percent of the value for taxes and insurance.a. How many salamis should Gold have flown in and how often should he order them?b. How many salamis should Gold have on hand when he phones his brother to send another shipment?c. Suppose that the salamis sell for $3 each. Are these salamis a profitable item for Gold? If so, what annual profit can he expect to realize from this item? (Assume that he operates the system optimally.)d. If the salamis…
A local whole seller for Lipton tea estimates an annual demand of tea at 3900 kgs. It costs RO 10 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 25 % of purchase price. The price RO 1 per kg. The company is operating 6 days per week. What is the economic order quantity (EOQ) in kg? Round-up to the nearest integer- Oa. None is correct O b. 593 O c. 749 d. 267 e. 559

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Example 90. A company finds that the demand for an item is uniform at 10,000 units per year. It costs 50 each time to place an order, regardless of the quantity order. If the holding cost is ? 1 per unit per year, find the economic order quantity.