6-20 Lila\'s brother believes that she places too many orders for screws per yea

Question

6-20 Lila's brother believes that she places too many orders for screws per year. He believes that an order should be placed only twice a per year. If Lila follows her brother's policy, how much more would this cost every year over the ordering policy that she developed in Problem 6-18. If only two orders were placed each year, what effect would this have on the ROP?

6-18 Lila Battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who works in her brother's hardware store, is in charge of purchasing. She estimates that it costs $10 every time an order is placed. This cost includes her wagesm the cost of the forms useied in placing the order, and so on. Futhermore, she estimates that the cost of carrying one screw in inventory for a year is one hald of 1 cent. Assume that the demand is constant throughout the year.

a) how many number 6 screw should lila order at a time if she wishes to minimize total inventory cost?

20,000 units or screws

b) How many orders per year would be placed? What would the annual ordering cost be?

I got: 5 orders x 10= $50

c) What would the average inventory be? What would the annual holding cost be?

10,000 x 0.005 = $50

A detailed answer would be great thanks!

Explanation / Answer

problem 6-18

https://docs.google.com/viewer?a=v&q=cache:Jv9O9ILAJdIJ:www.studentoffortune.com/question/996852/In-problem-6-18-you-helped-Lila-Battle-deteermine-the-optimal-order-quanitity/1611994-Lila Battle EOQ Problem.doc+&hl=en&gl=in&pid=bl&srcid=ADGEESjTu6F4l0dqSRcZl_F9RiBR1nnAxvowtroVcnmV_1WECA0qvrTWDJjX9wumvWrxA9mDOjfW0RDOs90X7SBcPnOWiEdLdlLglmth2pBgL8poCQFoaESMvWfvaek2qY0Pd14I-Sbt&sig=AHIEtbQG5V2bY8gLlS5r-C0WmCBp3V6PAg

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