Problem 6.29

# Problem 6.29 - Demand Container Capacity Cost per order...

• Homework Help
• 1

This preview shows page 1. Sign up to view the full content.

Demand 5000 diesel engine Container 100 cubic ft Capacity 5,000 cubic ft Cost per order \$10 Carrying cost \$10 per engine Assuming a 360-day year EOQ 100 This should be the quantity ordered, but because of the constraint in the warehouse the company can only afford to order 50 units at a time \$500 \$1,000 \$1,500 Note: Purchasing cost is NOT included since no data was provided for purchase cost per unit 100 14 5000 cubic ft No, the company should NOT expand This is so because with an expansion, and assuming that the expansion would allow the company to finally follow EOQ, total inventory cost and ordering cost is still equal to \$1,500 - same as before Clearly, there is no benefit The cost of expansion should be equal or lower than the present value of the amount of saved up from total annual
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: inventory cost for the totale conomic life of the warehouse \$1,000 \$500 \$1,500 What is the annual inventory carrying cost? What is the annual cost of ordering? What is the total cost, including purchasing cos What is the largest number of motors they will need to store on any given day? What is the smallest number of motors they will need to store on any given day? Assume demand is constant throughout the year. How much should Douglas Boats expand to handle their invento Do you think they should expand? How much would it be worth for the company to make the expansion?...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern