HW8-Solution

# HW8-Solution - 1 Problem 12(4 points a EOQ = = = 79 units(1...

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1. Problem 12: (4 points) a. EOQ = = = 79 units (1 point) b. Total annual cost = (79/2)(5) + (1560/79)(10) = \$197.50 + \$197.47 = \$394.97 (1 point) c. Reorder point = R = dL = (1560 bags/year)(1 year/52)(1 week) = 30 units (1 point) d. Describe EOQ inventory policy Reordering 79 units each time when inventory level drops to 30 unit is going to minimize total inventory cost in terms of annual ordering costs and annual holding costs, which will be \$394.97. 2. Problem 14: (3 points) a. 1 point EOQ at price \$14.50/bag = = 92.8 bags (not a feasible quantity at the given price break) EOQ at price \$16.00/bag = = 88.3 bags (not a feasible quantity at given price break) b. 1 point Total cost at Q = 390 (3-month supply): = (390/2)(16 x 0.25) + (1560/390)(10) + (16)(1560) = \$25,780 Total cost at Q = 780 (6-month supply): = (780/2)(14.50 x 0.25) + (1560/780)(10) + (14.50)(1560) = \$24,053.75 c. Describe Inventory Policy (1 point) It is cheapest to order a 6-month supply 3. (3 points) Good Garden Company (GGC) produces a high-quality organic lawn food and weed

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## This note was uploaded on 10/17/2011 for the course MNGT 368 taught by Professor Curthurds during the Spring '08 term at Nicholls State.

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HW8-Solution - 1 Problem 12(4 points a EOQ = = = 79 units(1...

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