Consider a single source procurement situation: You have a demand rate of 151 units per period,...

Consider a single source procurement situation: You have a demand rate of 151 units per period, replenishment rate of 2,550 units per period, lead time of 8 periods, item cost of 21.18, cost per procurement of 7.77, holding cost per unit of 7.63, and per unit shortage cost of 10.43. Find the minimum cost procurement quantity..

Expert Solution

let, do demand rate per day 62 unit cost of us rentory Co= ordering cost unit Innentory fold Cho holding cost sunit 1 year on backorder or shortage cost funit year D--Annual demand rate then optimum procurement Quantity will be given by Qopt = 2D Co . G+G 1 backor -dee lisroutory where, backordering is allowed is given question, Here D=2550 x 0 = 18000 units Co= 7.77 4 = 7.63 4 =10.43 i. Qopt is also known as minimum wost procurement quantity 12x 18000 X 7.77 10.43€ 7.63 i. Qopt = 7.63 10.43 Qoht 3 251.951 mit. thus minimum cost prourement quantity should by 251.951 252 anits per procurement.

milcah answered 2 years ago

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