Extra_EOQ_lecture_example1

# Extra_EOQ_lecture_example1 - interest rate. 1. What is the...

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1 311 Operations Management Spring 2007 Name________________________ Section_______________________ Quiz #3 EOQ (Solution) A specialty coffee house sells Columbian coffee at a fairly steady rate of 300 pounds weekly (there are exactly 50 weeks per year). The beans are purchased from a local supplier for 2.30 per pound. The coffee house estimates that it costs them \$50 in paper work and labor to place an order for coffee, and holding costs are based on 20% annual
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Unformatted text preview: interest rate. 1. What is the optimal order quantity for Columbia coffee? 25 points 8 . 1805 46 . 50 * 300 * 50 * 2 * = = Q 2. How many orders are placed per year? 25 points 300*50/1805.8 = 8.31 times a year 3. How frequent are orders placed? 25 points 12/8.31 = 1.44. Every 1.44 months. 4. What is the average holding and order placing costs (No need to include the cost of coffee)? 25 points 66 . 830 ) 300 * 50 ( * 50 * 46 . * 2 * * * 2 * = = = H S D TC...
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## This note was uploaded on 06/03/2008 for the course BUAD 311 taught by Professor Vaitsos during the Spring '07 term at USC.

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