QUESTION 1 1 points Use the following scenario and data for all question:s Deman

Question

QUESTION 1 1 points Use the following scenario and data for all question:s Demand for a specific design of dinning sets has been fairly large in the past several years and Statewide Furnishings, Inc. usually orders new dinning sets 10 times a year. It is estimated that the ordering cost is $400 per order. The carrying cost is $50 per unit per year. Furthermore, State Wide Furnishings, Inc. has estimated that the stock out cost is $120 per unit per year. Based on forecast, the annual demand is 600 units. State Wide Furnishings, Inc. has 350 working days in a year and its lead time is 14 working days. Assume the inventory policy of Statewide Furnishings, Inc. does not allow stock out. Determine the economic order quantity. O 98 34 24 None of the above QUESTION 2 1 points Assume the inventory policy of Statewide Furnishings, Inc. does not allow stock out. Determine total annual relevant, including the ordering and holding, cost. ? 2448.98 2450.00 400.0 O 4898.98 None of the above

Explanation / Answer

Question 1

Annual demand, D = 600 units

Ordering cost, S = $ 400

Holding cost, H = $ 50

Economic order quantity without stockout = SQRT(2DS/H) = SQRT(2*600*400/50) = 98

Question 2

Total annual relevant cost (ordering and holding cost) = (D/Q)*S+(Q/2)*H = (600/98)*400+(98/2)*50 = $ 4898.98

Question 3

Lead time, L = 14 days

Daily demand, d = D/350 = 600/350 = 1.71

Reorder point = d*L = 1.71*14 = 24

Question 4

Stockout cost, B = 120

EOQ = SQRT((2DS/H)*(H+B)/B)

= SQRT(((2*600*400/50)*(50+120)/120)

= 117

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