Answer 1: EOQ is given by sqrt (2*D*S/H) where D= Demand in Kg/year , S = orderi
ID: 373212 • Letter: A
Question
Answer 1:
EOQ is given by sqrt (2*D*S/H) where D= Demand in Kg/year , S = ordering cost , H = holding cost
Hence in this case we have EOQ = sqrt {2* (400*52)*50/(.3*1.3)}
= 2309.40 kg
Answer 2:
Now if we order 4000 kg in each order
Our ordering cost: = no. of orders in a year * $50
= (400*52/4000) * 50 = $ 260
Our holding cost: = (Q/2 )* holding cost as a % * cost of 1 unit
= (4000/2) * .3 * 1.3
= $ 780
Total = $ 1040
Answer 3:
Now if we order 2000 kg in each order
Ordering cost = (400*52/2000) * 50 = $520
Holding cost = (2000/2) *.3 * 1.3 = $ 390
Total = $ 910
Cost per kg = Total ordering + holding cost divided by the total demand for the year
= 910/ (400*52) = $ .04375 per kg
Answer 4:
At EOQ i.e Q =2309.4
Ordering cost = (400*52/2309.4)*50 = $ 450.33
Holding cost = (2309.4/2)*.3*1.3 = $ 450.33
Total = $ 900.66
Annual purchase cost = Cost of material + Ordering cost = $ 400*52*1.3 + $ 450.33 = $ 27490.33
So as a % = 900.66 /27490.33 = 3.276%
Answer 5:
In case or Q =10000 kg our cost price will be 1.3*.975 = 1.2675 per kg
Purchasing cost = 400*52*1.2675 = $ 26364
Ordering cost = (400*52/10000)*50 = $ 104
Holding cost = (10000/2)*.3*1.2675 = $ 1901.25
Total cost = $ 28369.25
Which is ($ 28369.25 - $ 27490.33) = $ 878.92 greater than the EOQ cost hence option C
Explanation / Answer
BZoom sells toy bricks that can be used to construct a wide range of machines, animals, buildings, etc. They purchase a red dye powder to include in the resin they use to make the bricks. The power is purchased from a supplier for $1.3 per kg. At one production facility, BZoom requires 400 kgs of this red dye power each week. BZoom's annual holding costs are 30% and the fixed cost associated with each order to the supplier is $50. How many kgs should BZoom order from its supplier with each order to minimize a. the sum of ordering and holding costs? 2,309 kgs If BZoom orders 4,000 kgs at a time, what would be the sum of annual ordering and holding costs? $ 10,405 (Round your answer to 3 decimal places.) If BZoom orders 2,000 kgs at a time, what would be the sum of ordering and ** holding costs per kg of dye? | s910.000 per kg (Round your answer to 2 decimal places.) If BZoom orders the quantity from part (a) that minimizes the sum of the ordering d. and holding costs. What is the annual cost of the EOQ expressed as a percentage of the annual purchase cost? 999.67 percent BZoom's purchasing manager negotiated with their supplier to get a 2.5% discount on orders of 10,000 kgs or greater. What would be the change in BZoom's annual total cost (purchasing, ordering and holding) if they took advantage of this deal instead of ordering smaller quantities at the full price? It would decrease by more than $1,000 It would decrease by less than $1,000 It would increase by less than $1,000 O it would increase by more than $1,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.