A6.docx - Q1 D = 12,000 units per year CO(ordering cost = $25 per order C(purchase cost = $2.5 per unit Ch(holding cost = 0.2*$2.5 = $0.5 per unit per

A6.docx - Q1 D = 12,000 units per year CO(ordering cost =...

This preview shows page 1 - 5 out of 5 pages.

Q1: D = 12,000 units per year C O (ordering cost) = $25 per order C (purchase cost) = $2.5 per unit C h (holding cost) = 0.2%*$2.5 = $0.5 per unit per year Type the data in the Excel QM spreadsheet: (a) The optimal order size is Q* = 2 DC o C h = 2 12000 25 0.5 = 1095.45 1096 units (b) The reorder point is R* = LD = 5*(12,000/250) = 240 (c) The cycle time T* = Q*/D = 1095.45/12000 = 0.0913(year) * 250 working days ≈ 23 (days) (d) The total annual holding costs = C h Q 2 = $ 0.5 1095.45 2 = $ 273.86
Image of page 1
The total annual ordering cots = C o D Q = $ 25 12000 1095.45 = $ 273.86 The total annual holding cost and annual ordering cost are $273.86 + $273.86 = $547.72. Q2: D = 1,700 shirts per year C O (ordering cost) = $120 per order C (purchase cost) = $38 per shirt C h (carrying cost) = 25% per year per shirt Type the data in the Excel QM spreadsheet: (a) From the excel QM, when the order quantity is Q* = 500, the total cost is minimum at T C = $64,704 (b) The holding cost C h = 0.25*$38 = $9.5 The total cost of current policy bookstore uses Tc = C o D Q + C h Q 2 + DC = $ 120 1700 200 + $ 9.5 200 2 + 1700*$38 = $66,570
Image of page 2
The annual savings of this inventory policy over the policy the bookstore currently uses is $66,570 - $64,704 = $1,866 Q3: D = 1,000 bottles per year
Image of page 3
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 5 pages?

  • One '18
  • Christopher O'Donnell

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors