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BUAD 311 HW #7

# BUAD 311 HW #7 - The critical ratio is between 500 and 600...

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BUAD 311 M/W 12pm HW7 1 . EOQ = (2DS)/H, D = Demand = 2600, S = Set up costs = 20, H = Holding costs = 2 a) EOQ = (2* 2600 * 20)/2 = 228 b) Number of orders placed per year = D/EOQ = (50*52) / 228 = 11.4 c) Frequency of orders placed = 12 months/11.4 = 1.05 months d) Total Holding Cost = (Q/2)*H = 228/2 * 2 = \$228 Average total holding and order placing cost = \$228 + 228 = \$456 e) Reorder point = (D/Time)*delivery time = 2600/365 * 20days = 143 pounds 2 . R = Revenue/unit = 20, C = Purchasing cost/unit = 8, V = Salvage value/unit = 4 Demand Probability Cumulative Probability 300 0.05 0.05 400 0.10 0.15 500 0.40 0.55 600 0.30 0.85 700 0.10 0.95 800 0.05 1.00 Ave demand= (300*0.05)+(400*0.1)+(500*0.4)+(600*0.3)+(700*0.1)+(800*0.05)= 545 Sally needs to produce more than 545 shirts because the overage cost is less than the shortage cost: (\$8-\$4=\$4) < (\$20-\$8=\$12). F(Q) = Cu/(Cu+Co) = (R-C)/(R-C+C-V) = (R-C)/(R-V) = (20-8)/(20-4) = 0.75
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Unformatted text preview: The critical ratio is between 500 and 600. Therefore, Sally should produce 600 shirts . 3 . R = 15, C = 10, V = 0, Cu = 15-10 = 5, Co = 10, F(Q) = (R-C)/(R-V) = (5/(15+0) = 0.333 Z score 0.333 = (.500 - .667) = -.167 = -0.43 table score a) Q* = mean + (Z score) st. dev = 5000 + (-0.43)1000 = 4570 b) (Q*-3000)/(7000-3000) = 0.333 .333(4000) = (Q*-3000) Q* = new quantity = 4332 4. Tegdiws is a fixed-order quantity system. EOQ = √ (2DS)/H D = Demand = 10000 S = Set up costs = \$150 H = Holding costs = \$2 EOQ = √ (2 * 10000 * 150)/2 = 1225 a) Reorder quantity = EOQ = 1225 Reorder point = (D/Time)*delivery time = (10,000/365) * 28days = 768 b) Widgets are a fixed-time period reordering system. Reorder quantity = ((5000/365) * (21days +7days)) + 5units = 389 Order quantity every 3 weeks = 389 minus current inventory level...
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