Question

In: Operations Management

A retail company sells electronics products including mouse and keyboard. Mouse and keyboard are acquired from...

A retail company sells electronics products including mouse and keyboard. Mouse and keyboard are acquired from distinct suppliers. The monthly demand for a mouse is 2000, while the monthly demand for a keyboard is 1000 products. Mouse costs to company $12 and keyboard's cost are $18. The company has an annual holding cost of 20%, and the fixed shipment cost is $300. The procurement manager is not sure whether to order the mouse and keyboard separately or jointly. Assist with her decision making by calculating the following: 1) Optimal order size, 2) Optimal order frequency, 3) Cycle inventory, 4) Total cost of holding and ordering. Hint: Check the problem where products ordered and delivered separately vs. jointly.

Solve the problem using EXCEL.

Solutions

Expert Solution

Soution using Excel is as follows:

Ordered Separately

EXCEL FORMULA:

----------------------------------------------------------------------------------------------------------------

Ordered Jointly

EXCEL FORMULA:

-------------------------------------------------------------------------------------------

We see that the total cost of Joint ordering is lower. Therefore, the procurement manager should order jointly

keosha answered 1 month ago
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