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In-Class Excercise

# In-Class Excercise - TC 100 = EXAMPLE 6 Surge Electric uses...

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EXAMPLE 5 The maintenance department of a large hospital uses about 816 cases of liquid cleanser annually. Ordering costs are \$12, carrying costs are \$4 per case a year, and the new price schedule indicates that orders of less than 50 cases will cost \$20 per case, 50 to 79 cases will cost \$18 per case, 80 to 99 cases will cost \$17 per case, and larger orders will cost \$16 per case. Determine the optimal order quantity and the total cost. SOLUTION D = S = H = 1. Compute the common EOQ: = TC 70 = Carrying cost + Order cost + Purchase cost = ( Q /2) H + ( D / Q 0 ) S + PD

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TC 80 =
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Unformatted text preview: TC 100 = EXAMPLE 6 Surge Electric uses 4,000 toggle switches a year. Switches are priced as follows: 1 to 499, 90 cents each; 500 to 999, 85 cents each; and 1,000 or more, 80 cents each. It costs approximately \$30 to prepare an order and receive it, and carrying costs are 40 percent of purchase price per unit on an annual basis. Determine the optimal order quantity and the total annual cost. SOLUTION D = S = H = .40 P Find the minimum point for each price, starting with the lowest price, until you locate a feasible minimum point....
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