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Sample%201 - 170 170 255 255 457.5 457.5 697.5 697.5 960 tI...

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40000 20000 5000 1000 Q (not to scale) 300K 275K 250K Average Annual Cost I ( t ) t 170 255 457.5 697.5 960 (0, -) (100, 1) (170, 1) (242.5, 2) (337.5, 3) (402.5, 4) (507.5, 4) 142.5 167.5 160 152.5 277.5 287.5 265 457.5 445 667.5 170 255 457.5 697.5 960 (0, -) (100, 1) (170, 1) (242.5, 2) (337.5, 3) (457.5, 3) (615, 3) 142.5 167.5 160 152.5 277.5 287.5 265 457.5 445 667.5 Problem 1. An operating telephone company purchases large quantities of semiconductors to be used in manufacturing electronic switching systems. Shortages are not allowed. The demand rate is 25,000 units per year, and the order cost is \$100 per order. The annual inventory-carrying rate is 24% and is based on the value of average inventory. The supplier’s price schedule is as follows: Order Size Variable Cost Per Unit (All-Units) 0 < Q < 5000 \$12 5000 Q 20,000 \$11 20,000 Q 40,000 \$10 40,000 Q \$ 9 Determine the optimal order quantity and sketch the step function for the total cost on the following page.

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Problem 2. A manufacturing firm in Calgary produces an item in a 3-month time supply (i.e., Q = D/ 4). An analyst, attempting to introduce a more logical approach to selecting run quantities, has obtained the following estimates of characteristics of the item:
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Sample%201 - 170 170 255 255 457.5 457.5 697.5 697.5 960 tI...

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