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Unformatted text preview: T C ( Q , S m a x ) = A D Q + C D + i C [ Q ( 1- D P )- S m a x ] 2 2 Q (1- D P ) + W 1 S m a x 2 2 Q ( 1- D P ) + W S m a x D Q IE 383 Assignment 10 Due April 13, Monday BEFORE class Please note: 1. Please use 3 decimal points for all interstage calculation steps and 2 decimal points for final answers when necessary. 2. Please show your equations using the symbols we used in class, otherwise 10 points will be deducted. For example, A: ordering cost C: item cost i: interest rate D: demand rate P: production rate W1: variable shortage cost W: fixed shortage cost 3. It is highly recommended to use Excel to solve this assignment. Problem 1 The Spruce Creek Nursery sells organic fertilizer mostly to gardeners and homeowners for twelve months per year. The annual demand for fertilizer is 250,000 pounds. The ordering cost is $3000 (including transportation cost, handling cost, etc.). The purchase cost is $0.5 per pound. It takes three months to receive the order from the supplier when the order is placed. The monthly inventory holding cost is $0.05 per pound and no shortage is allowed. a) Determine (PLEASE ANSWER IN ORDER, otherwise 5 points will be deducted) the optimal order size the order frequency per year the total minimum annual cost per year...
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- Spring '08