Solution_ Homework6_Inventory Management

Solution_ Homework6_Inventory Management - 311 Operations...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
311 Operations Management Fall 2008 Solution: Homework # 6 – Inventory Management 1. (30 points; 5 points per part) A company provides free tea to their employees by sourcing their tea supplies from Trojan Tea, a new start-up run by Marshall students. Trojan Tea has promised to supply the company 50 pounds of their specialty loose leaf weekly, for 52 weeks per year. Trojan Tea, in turn, purchases their tea from a niche Indian supplier for $10.00 per pound. The shipping cost per order is $40. Tea storage must be done in a customized, humidity-controlled environment, and storage costs are estimated to be $2 per pound per year. Currently, Trojan Tea places an order every 4 weeks. a. What is the current annual order cost? 52/4*40 = 520 b. What is the current storage cost? 50*4/2*2 = 200 c. What is the optimal order quantity for Trojans Tea? pounds 322 2 40 * 50 * 52 * 2 2 = = = H DS EOQ d. How many orders are placed per year? 52*50/322 = 8.06 e. Trojan Tea realizes that holding tea inventory ties up cash and its holding cost of $2 per pound per year does not take into the current financing
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/10/2008 for the course BUAD 14900 taught by Professor Hiroshiochiumi during the Fall '08 term at USC.

Page1 / 3

Solution_ Homework6_Inventory Management - 311 Operations...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online