Question

17. An appliance store carries a specialty model of microwave ovens. The demand for the microwave oven is relatively constant at 2500 units per year. Placing an order costs the store $500 regardless the quantity ordered. Carrying one unit over a one year period costs the store $50. The store opens 300 days per year and the lead time for this item is 12 working days. Because of the special features of the microwave oven, customers may buy it whether it is currently available in the store. Hence, the store is considering selling it on a back order basis if it is beneficial. It is estimated that one unit on back order for a one year period costs the store $150.

Assuming shortage is allowed and the store manager is sure that shortages will not become lost sales, determine the annual holding cost.

		4844.96
		4837.60
		3609.40
		1228.20
		none of the above

18. An appliance store carries a specialty model of microwave ovens. The demand for the microwave oven is relatively constant at 2500 units per year. Placing an order costs the store $500 regardless the quantity ordered. Carrying one unit over a one year period costs the store $50. The store opens 300 days per year and the lead time for this item is 12 working days. Because of the special features of the microwave oven, customers may buy it whether it is currently available in the store. Hence, the store is considering selling it on a back order basis if it is beneficial. It is estimated that one unit on back order for a one year period costs the store $150.
Assuming shortage is allowed and the store manager is sure that shortages will not become lost sales, determine the annual shortage cost.

		4844.96
		4837.60
		3609.40
		1228.20
		none of the above

QUESTION 19

1. An appliance store carries a specialty model of microwave ovens. The demand for the microwave oven is relatively constant at 2500 units per year. Placing an order costs the store $500 regardless the quantity ordered. Carrying one unit over a one year period costs the store $50. The store opens 300 days per year and the lead time for this item is 12 working days. Because of the special features of the microwave oven, customers may buy it whether it is currently available in the store. Hence, the store is considering selling it on a back order basis if it is beneficial. It is estimated that one unit on back order for a one year period costs the store $150.
   Assuming shortage is allowed and the store manager is sure that shortages will not become lost sales, determine the annual total relevant, including ordering, holding and shortage, cost.

   		4844.96
   		4837.60
   		3609.40
   		1228.20
   		none of the above

20. An appliance store carries a specialty model of microwave ovens. The demand for the microwave oven is relatively constant at 2500 units per year. Placing an order costs the store $500 regardless the quantity ordered. Carrying one unit over a one year period costs the store $50. The store opens 300 days per year and the lead time for this item is 12 working days. Because of the special features of the microwave oven, customers may buy it whether it is currently available in the store. Hence, the store is considering selling it on a back order basis if it is beneficial. It is estimated that one unit on back order for a one year period costs the store $150.
Assuming shortage is allowed and the store manager is sure that shortages will not become lost sales, determine the reorder point.

		35
		65
		224
		258
		none of the above

Answer 1