In: Operations Management
A jewelry firm buys semiprecious stones to make bracelets and
rings. The supplier quotes a price...
A jewelry firm buys semiprecious stones to make bracelets and
rings. The supplier quotes a price of $8.20 per stone for
quantities of 600 stones or more, $8.70 per stone for orders of 400
to 599 stones, and $10 per stone for lesser quantities. The jewelry
firm operates 214 days per year. Usage rate is 25 stones per day,
and ordering costs are $48.
a. |
If carrying costs are $2 per year for each stone, find the order
quantity that will minimize total annual cost. (Round your
intermediate calculations and final answer to the nearest whole
number.)
|
b. |
If annual carrying costs are 27 percent of unit cost, what is
the optimal order size? (Round your intermediate
calculations and final answer to the nearest whole
number.)
|
Optimal order
size |
stones |
c. |
If lead time is 5 working days, at what point should the company
reorder?
|