1. Assume annual demand is 40 units, ordering cost is $5.00, and holding cost is
ID: 2471198 • Letter: 1
Question
1. Assume annual demand is 40 units, ordering cost is $5.00, and holding cost is $1.00/unit/year.
a)Find EOQ.
b)Find total cost.
c)Find cycle time.
d)Find the number of orders per year.
2. The ABC bumber company produces bumpers at the rate of 400 per day. Usage is 300 per day. Company operates 200 days a year. Holding cost is $2.50/unit/year (0.0125/unit/day). Ordering cost is $48.00
a) Find the optimal run size.
b) Find the total cost.
c) Find the run time.
3. Consider the following prices breaks;
Order size Cost
0-299 $15.00
300-499 $14.00
500 or more $12.00
Holding cost is 30% of cost. Ordering cost is $40.00. Annual demand is 6000 units. Find total costs and optimal order quantity.
Explanation / Answer
Solution:
1)
Annual Demand = 40 Units
Ordering Cost per order = $5
Holding Cost per unit per annum = $1
a) EOQ = [(2 x Annual Demand x Ordering Cost Per Order) / Holding Cost per unit per annum]1/2
= [(2 x 40 x 5) / 1]1/2
= 20 Units
b) Find Cycle Time = Annual Demand / EOQ = 40 / 20 = 2 times or 6 month
c) Number of Order per year = Annual Demand / EOQ = 40 / 20 = 2 orders
2)
Per Day production = 400
Operating days in a year = 200 days
Annual Usage = 200 x 400 = 80,000
Holding Cost per unit per annum = $2.50
Ordering Cost per order = $48
a) Optimum Run Size = [(2 x Annual Demand x Ordering Cost Per Order) / Holding Cost per unit per annum]1/2
= [(2 x 80,000 x 48) / 2.5]1/2
= 1,753 bumpers
For rest questions please as separate question
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