# ch12 - Chapter 12 Problem 2: a. AIT = (15)(18000)/365 =...

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Problem 2: a. AIT = (15)(18000)/365 = 739.7 units b. AIT = (2)(18000)/365 = 98.6 units c. Cost related information is needed to compare the two alternatives. For example, transportation costs, insurance costs, and the speed and reliability of the mode of service delivery are among the important considerations in comparing the two alternatives. Problem 4: a. Inventory Turnover = \$3,600,000/\$250,000 = 14.4 inventory turns b. Weeks of Supply = \$250,000/(3,600,000/52) = 3.6 weeks of supply Problem 6: a. Annual holding cost rate = 20.5% b. Annual holding costs = (\$3,400,000)(0.205) = \$697,000 Problem 8: a. Annual holding cost rate = 10% + 4.5% + 10% = 24.5% b. Total annual holding costs = (0.245)(3,400,000) = \$833,000 Problem 10: a. Average inventory level = 2 Q = 2 650 = 325 units b. Number of orders placed per year = Q D = 650 5200 = 8 orders c. Annual inventory holding cost = H Q 2 = (325)(3) = \$975 d. Total annual ordering cost = (D/Q)(S) = (8)(50) = \$400 e. Total annual cost = \$975 + \$400 = \$1375 Plus \$62,400 (the cost of the heat sinks) = \$63,775. An order quantity of 650 units yields lower total annual costs than an order quantity of

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## This note was uploaded on 06/12/2011 for the course MNGT 368 taught by Professor Curthurds during the Spring '08 term at Nicholls State.

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ch12 - Chapter 12 Problem 2: a. AIT = (15)(18000)/365 =...

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