suppose that you are the manager of a production department that uses 400 boxes

Question

suppose that you are the manager of a production department that uses 400 boxes of rivets per year. current data for the problem are: annual demand is D=400 boxes er year; ordering cost is S= $80; inventory carrying cost per box is 20% of the per-box cost, and the per-box purchase cost is P= $8. A. What is the EOQ quantity? B. What is the average inventory? C. What is the annual holding cost D. What is the optimal number of orders per year E. What is the annual ordering cost? F. What is the annual total cost excluding the purchasing cost? G. how much would it cost more annually (excluding the purchase cost) if the management decides to buy 400 boxes, instead of the EOQ quantity obtained in part A above, for each order? Hi.t: calculate the total cost based on this assumption and compare the new total cost to your answer in part F.

Explanation / Answer

suppose that you are the manager of a production department that uses 400 boxes of rivets per year. current data for the problem are: annual demand is D=400 boxes er year; ordering cost is S= $80; inventory carrying cost per box is 20% of the per-box cost, and the per-box purchase cost is P= $8. A. What is the EOQ quantity? B. What is the average inventory? C. What is the annual holding cost D. What is the optimal number of orders per year E. What is the annual ordering cost? F. What is the annual total cost excluding the purchasing cost? G. how much would it cost more annually (excluding the purchase cost) if the management decides to buy 400 boxes, instead of the EOQ quantity obtained in part A above, for each order? Hi.t: calculate the total cost based on this assumption and compare the new total cost to your answer in part F.

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