hw8 soln

# hw8 soln - IE 383 Assignment 8 Solution Due Monday,...

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Assignment 8 Solution Due Monday, 10/26/09, before class Please note: Please use 3 decimal points for all interstage calculation steps and 2 decimal points for final answers. Please show complete steps in an organized manner. Problem 1 The ePaint store stocks paint in its warehouse and sells it online. The company wants to determine the optimal order order size and total inventory cost for iron-coat paint given an estimated annual demand of 12000 gallons, an annual carrying cost of \$1.25 per unit and an ordering cost of \$150 per order. They would also like to the number of orders made annually and the time between orders. Solution : Carrying cost h = \$1.25 per gallon Ordering cost A = \$150 per order Demand D = 12,000 gallons Optimal order quantity is Q opt = [(2*A*D)/ h ] ^1/2 = 1697.05 ~ 1698 units Total annual inventory cost = [(A*D)/Q opt ] + h *Q opt /2 = 2121.3 \$ Note here that since the products are purchased and not ordered, there is no production cost involved. The number of orders per year = D/Q

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## This note was uploaded on 12/17/2009 for the course IE 383 taught by Professor Leyla,o during the Spring '08 term at Purdue.

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hw8 soln - IE 383 Assignment 8 Solution Due Monday,...

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