Personally I thought that this did not have enough info to solve, especially for
ID: 339069 • Letter: P
Question
Personally I thought that this did not have enough info to solve, especially for the first few parts and I have asked my professor about that, still waiting on his response, but I still need help with it regardless. Thanks
2. You are the owner of Pueblo Powerful Pizza. One of your functions is to minimize your cost for the cardboard pizza boxes, for which you have the following information: each box costs S0.25, holding cost is 100% of the price, ordering cost is $10/order, and vou estimate a constant demand of 20.000 boxes/year. You would minimize total cost by purchasing the EoQ quantity each time you place an order, assuming no quantity discounts are available a. What is the EOQ quantity? b. What is the total cost per year if you used the EOQ quantity from part a? c. How many orders per year, on average, will be placed? d. If the lead time is 5 days (with 365 days per year), what is the reorder point? e. How many days will there be between orders (with 365 days per year)? f You decide that the time between orders is too long, and you would prefer to order just enough to last 1 week (7 days, and there are 52 weeks and 365 days per year), and you will place an order every week. How much will you order each week to cover just one week's demand? Continuing part f, calculate the total cost of the weekly plan and determine the additional cost compared to the EOQ cost from part b? You decide that the additional cost from part g is not acceptable, so you consider quantity discounts, for which you have found a supplier. She will sell you the boxes at the following quantity discount pricing: 1 to 9999 boxes at $0.25 per box; 10.000 to 19,999 boxes at $0.19 per box and 20,000 and over at $0.16 per box. What quantity will result in the least total cost? Use the same data from earlier in this problem. g. h.Explanation / Answer
Annual demand (D) = 20000 boxes
Ordering cost (S) = $10
Holding cost (H) = 100% of price = 100% of $0.25 = $0.25
a) Economic order quantity (Q) = sqrt of (2DS / H)
= sqrt of [(2 x 20000 x 10)/0.25]
= sqrt of 1600000
= 1265 boxes
b) Total annual cost = Ordering cost + Holding cost
= [(D/Q) S] + [(Q/2)H]
= [(20000/1265)10] + [(1265/2)0.25]
= $158.10 + $158.13
= $316.23
C) Number of orders per year = D/Q = 20000/1265 = 15.81
d) If lead time (L) = 5 days
Reorder point = (D/365) x L = (20000/365)5 = 273.97 boxes
e) Time between orders = (Q/D) number of days per year = (1265/20000)365 = 23.09 days
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