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Group 6 HW5

Group 6 HW5 - Group 6 Please answer both questions one of...

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Group 6 Please answer both questions, one of them will be graded as HW 5. 1. Scenario: Suppose your firm purchases a \$4 per unit part from a supplier. Your firm uses the part to assemble red widgets. On average, you use 50,000 units of this part each year. Every time you order this particular part, you incur a sizable ordering cost of \$800 regardless of the number of parts you order. Your cost of capital is 20% per year. (See exercise 6.1, p. 157) a) How many parts should you purchase each time you place an order (i.e., what is the optimal order quantity)? b) To satisfy annual demand, how many times per year will you place orders for this part if you order the optimal quantity? a) H=.2*\$4 = \$0.80 S= \$800 R = 50,000 *= = ( ). = Q 2SRH 2800 50000 8 , 10 000 units b) = = = Required order number RQ 5000010000 5 times

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2. SCENARIO: Victor sells a line of dresses in his boutique. He charges \$300 per dress. His sales average 30 dresses per week. Victor's current order quantity is 10 week supply at a time. He pays the
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Group 6 HW5 - Group 6 Please answer both questions one of...

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