assignment 3 [Compatibility Mode] - Word TABLE TOOLS FILE HOME INSERT DESIGN PAG
ID: 2746620 • Letter: A
Question
assignment 3 [Compatibility Mode] - Word TABLE TOOLS FILE HOME INSERT DESIGN PAGE LAYOUT REFERENCES MAILINGS REVIEW VIEW Foxit PDF DESIGN LAYOUT Sign in Cu Find cReplace I Select Editing AaBbCcD AaBbCcDd AaBbCcDd AaBbCcDd AaBbCcDc AaBbCcDd Copy Paste Normal No Spac Heading 1 Heading 2 Title Subtitle Subtle EmEmphasis Intense E.Strong Quote- Format Painter Clipboard Font Paragraph Styles 1) Arecel a manufacturing company has received orders for 220 metal lockers, 105 shelves, 400 TV mounts and 75 poles for the month of May. Arecel sells metal lockers for $110 each, shelves for $250 each, TV mounts for $65 each and poles for $85 each Arecel has the option of manufacturing these products in house or purchasing them from an outside supplier. The associated costs are given below Product Cost if Manufactured Cost if purchased Locker Shelf TV Mount Pole 85 145 30 40 90 170 35 62 The company has three types of welding machines: 10 type P, 6 type Q and 5 type R Type P machines can complete 5 jobs/month, Q machines can complete 10 jobs/month and R machines can complete 11 jobs/month. Machine type Q and R can be used to weld lockers. Machine type P and Q can be used to weld shelves. TV mounts can only be welded on machine type R and poles can only be welded on machine type P a. Formulate a Linear Programming model that will maximize profit for Arecel PAGE 1 OF 3 411 woRDS + 100% 1:27 AM Search the web and Windows 4/19/2016Explanation / Answer
2.
Annual Demand = 6000
Daily Demand = Annual Demand / 250 = 6000 / 250 = 24
Ordering Cost = $ 80
Holding rate = 0.2
Cost = $30
a)
EOQ = Sqrt((2 * Annual Demand * Ordering Cost) / (Holding rate * Cost))
EOQ = Sqrt((2 * 6000 * 80) / (0.2 * 30)) = 400
b)
z = 98% = 2.05
Safety Stock = z * Std Deviation * Sqrt(lead Time) = 2.05 * 2 * Sqrt(12) = 14.2028
Reorder point = (Daily Demand * Lead Time) + safetry Stock = (24 * 12) + 14.2028 = 288 + 14.2028 = 302.2028
c)
Total Annual Cost = (Annual Demand * Price) + ((Annual demand / EOQ)* Ordering Cost) + ((Annual demand / 2) * Holding rate * Price)
Total Annual cost = (6000 * 30) + ((6000/400)*80) + ((400/2)*0.2*30)
Total Annual cost = $182400
d)
Case 1 :
We have already calculate the annual cost @ EOQ
Case 2:
Now, Calculate Annual Cost for Q= 500 and Price = $ 17
Total Annual cost = (6000 * 17) + ((6000/500)*80) + ((500/2)*0.2*17) = $ 103810
Case 3:
Now, Calculate Annual Cost for Q= 1500 and Price = $ 15
Total Annual cost = (6000 * 15) + ((6000/1500)*80) + ((1500/2)*0.2*15) = $ 92570
Crest should choose 1500 and above when making order because the total cost is minimum at this order level
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