Question
In: Operations Management
A local manufacturer uses 2,000 electronic switches boxes a year. Carrying costs are 23% of the...
A local manufacturer uses 2,000 electronic switches boxes a year. Carrying costs are 23% of the cost of the switch per year, and ordering costs are $15 per order. The following price schedule applies. What is the optimal order quantity? Show all total costs calculations and explain your answer.
Number of Switches Price per Switch
0 - 99 $17.50
100 - 999 $17.00
1000 or more $16.50
Solutions
Expert Solution
DEMAND = 2000
ORDERING COST = 15
HOLDING COST % = 23 %
EOQ = SQRT(2 * D * S / H), WHERE D = DEMAND, S = ORDERING COST, H = HOLDING COST
ANNUAL HOLDING COST = (Q* / 2) * H
ANNUAL ORDERING COST = (DEMAND / Q*) * S
ANNUAL PURCHASE COST = DEMAND * PER UNIT COST IN PARTCIULAR PRICE BRACKET
TCI = AHC + AOC + APC
OPTIMAL ORDER QUANTITY = 124
TOTAL COST FOR OPTIMAL QUANTITY = 34484
|
# |
MINIMUM QUANTITY |
MAXIMUM QUANTITY |
UNIT COST |
ADJUSTED HOLDING COST |
Q |
Q* |
AHC |
AOC |
APC |
TCI |
|
1 |
1 |
99 |
17.5 |
4.025 |
122 |
99 |
(99 / 2) * 4.025 = 199.24 |
2000 / 99 * 15 = 303.03 |
2000 * 17.5 = 35000 |
199.24 + 303.03 + 35000 = 35502 |
|
2 |
100 |
999 |
17 |
3.91 |
124 |
124 |
(124 / 2) * 3.91 = 242.42 |
2000 / 124 * 15 = 241.94 |
2000 * 17 = 34000 |
242.42 + 241.94 + 34000 = 34484 |
|
3 |
1000 |
OR MORE |
16.5 |
3.795 |
126 |
1000 |
(1000 / 2) * 3.795 = 1897.5 |
2000 / 1000 * 15 = 30 |
2000 * 16.5 = 33000 |
1897.5 + 30 + 33000 = 34928 |
Do leave a like for the answer if you found it helpful.
keosha answered 1 year agoRelated Solutions
Stanley’s Secretarial Services uses an average of 1,215 boxes of envelopes each year. Carrying costs per...
Stanley’s Secretarial Services uses an average of 1,215 boxes of
envelopes each year. Carrying costs per box are $75 per year, and
it costs $10 to place and receive an order.
a.
What is the optimal order quantity for boxes of envelopes, to
the nearest whole number?
Economic order quantity
boxes
b.
What is the average number of boxes of envelopes in inventory,
to the nearest whole number?
Average number of boxes
c.
How times will Stanley order envelopes...
A mail-order house uses 15,950 boxes a year. Carrying costs are 69 cents per box a...
A mail-order house uses 15,950 boxes a year. Carrying costs are
69 cents per box a year, and ordering costs are $100. The following
price schedule applies.
Number of Boxes
Price per Box
1,000 to 1,999
$1.40
2,000 to
4,999
1.30
5,000 to
9,999
1.20
10,000 or
more
1.15
a. Determine the optimal order quantity. (Round
your answer to the nearest whole number.)
b. Determine the number of orders per year.
(Round your answer to 2 decimal places.)
A mail-order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a...
A mail-order house uses 18,000 boxes a year. Carrying costs are
60 cents per box a year, and ordering cost are $96. the folling
price schedule applies.
Number of boxes
Price per box
1,000 to 1,999
$1.25
2,000 to 4,999
1.20
5,000 to 9,999
1.15
10,000 or more
1.10
A. What is the maximum level of inventory the company would have
to plan for?
B. what is the average level of inventory the company would have
to plan for?
C....
A mail-order house uses 15,890 boxes a year. Carrying costs are 60 cents per box a...
A mail-order house uses 15,890 boxes a year. Carrying costs are
60 cents per box a year, and ordering costs are $96. The following
price schedule applies.
Number of Boxes
Price per Box
1,000 to 1,999
$1.25
2,000 to 4,999
1.20
5,000 to 9,999
1.15
10,000 or more
1.10
a. Determine the optimal order quantity. (Round
your answer to the nearest whole number.)
Optimal order quantity
boxes
b. Determine the number of orders per year.
(Round your answer...
A mail-order house uses 15,725 boxes a year. Carrying costs are 49 cents per box a...
A mail-order house uses 15,725 boxes a year. Carrying costs are
49 cents per box a year, and ordering costs are $91. The following
price schedule applies.
Number of Boxes
Price per Box
1,000 to 1,999
$1.35
2,000 to 4,999
1.25
5,000 to 9,999
1.15
10,000 or more
1.10
a. Determine the optimal order quantity. (Round
your answer to the nearest whole number.)
Optimal order quantity
boxes
b. Determine the number of orders per year.
(Round your...
A mail-order house uses 15,725 boxes a year. Carrying costs are 49 cents per box a...
A mail-order house uses 15,725 boxes a year. Carrying costs are
49 cents per box a year, and ordering costs are $91. The following
price schedule applies.
Number of Boxes
Price per Box
1,000 to 1,999
$1.35
2,000 to 4,999
1.25
5,000 to 9,999
1.15
10,000 or more
1.10
a. Determine the optimal order quantity. (Round
your answer to the nearest whole number.)
Optimal order quantity
boxes
b. Determine the number of orders per year.
(Round your...
A mail-order house uses 15,725 boxes a year. Carrying costs are 49 cents per box a...
A mail-order house uses 15,725 boxes a year. Carrying costs are
49 cents per box a year, and ordering costs are $91. The following
price schedule applies.
Number of Boxes
Price per Box
1,000 to 1,999
$1.35
2,000 to 4,999
1.25
5,000 to 9,999
1.15
10,000 or more
1.10
a. Determine the optimal order quantity. (Round
your answer to the nearest whole number.)
Optimal order quantity
boxes
b. Determine the number of orders per year.
(Round your...
A mail-order house uses 15,750 boxes a year
A mail-order house uses 15,750 boxes a year. Carrying costs are 60 cents per box a year and ordering costs are $96. The following price schedule applies.Number of BoxesPrice per Box1,000 to 1,999$1.252.000 to 4,9991.205,000 to 9,9991.1510.000 or more1.10a. Determine the optimal order quantity (Round your answer to the nearest whole number) Optimal order quantity = _______ boxes b. Determine the number of orders per year. (Round your answer to 2 decimal places.) Number of order _______ per yearA jewelry firm buys semiprecious...
Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $100,000 in year 1...
Equipment maintenance costs for manufacturing explosion-proof
pressure switches are projected to be $100,000 in year 1 and
increase by 4% each year through year 5.
What is the present worth of the maintenance costs at an interest
rate of 10% per year, compounded quarterly for the first 3 years,
if the interest rate for years 4 and 5 are 10%/year compounded
monthly? (solve by hand DON'T use Excell program)
Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one...
Equipment maintenance costs for manufacturing explosion-proof
pressure switches are projected to be $125,000 in year
one and increase by 2.5% each year
through year five. What is the equivalent annual
worth of the maintenance costs at an interest rate of 10%
per year, compounded MONTHLY?
Please do not use excel and show formulas.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Write a program to multiply a polynomial with a given number. Code needed in java.
- MEAN CI x-bar (Grand Mean) LCL x-bar (CI-A2*R-bar) UCL x-bar (CI+A2*R-bar) Sample Range (Max-Min) R-bar (Mean)...
- Product Life Cycle Look at the following examples of products: Smartphones Drone video cameras 3-D televisions...
- Suppose f : [a, b] −→ R is continuous on [a, b] and that f attains...
- An investor buys a 6% coupon bond with 25 years to maturity and yield to maturity...
- 1. NPV: Project L costs $55,000, its expected cash inflows are $12,000 per year for 7...
- This is given as a practice problem for an upcoming exam, can you please explain it...
ADVERTISEMENT