The H.A.L. Computer Store sells a printer for $400. Demand for this is constant

Question

The H.A.L. Computer Store sells a printer for $400. Demand for this is constant during the year, and annual demand is forecasted to be 1100 units. The holding cost is $20 per unit per year, while the cost of ordering is $90 per order. Currently, the company is ordering 12 times per year (92 units each time). There are 250 working days per year and the lead time is 8 days. (a) Given the current policy of ordering 92 units at a time, what is the total of the annual ordering cost and the annual holding cost? (b) If the company used the absolute best inventory policy, what would the total of the ordering and holding cost be? (c) What is the reorder point? (d) How many days between orders with 12 orders per year?

Show work for each answer.

Explanation / Answer

Solution:

(a) TOC + THC = 1080 + 736 = $1816

(b) If we order EOQ = 92 units, TOC + THC = 1100 + 736 = $1,836.

(c) ROP = (1100/250)12 = 35.2 units

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.