Ray’s Satellite Emporium wishes to determine the best order size for its best-se
ID: 327517 • Letter: R
Question
Ray’s Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (Model TS111). Below is how the excel sheet is formatted, please use the same format to stay consistent witht the values and information needed to avoid confusion. Help is needed in finding the values for Q's 1 and 2. If possible, including the formulas used in excel.
Ray’s Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (Model TS111). Ray has estimated the annual demand for this model at 1,000 units. His cost to carry one unit is $10 per year per unit, and he has estimated that each order costs $25 to place. The purchase cost is $500 per unit.
1. For the order quantities Q = {25, 50, 75, 100, 125, 150}, find the annual setup ordering cost (S*D/Q), holding cost (H*Q/2), purchasing cost (C*D), and the total annual cost (including the purchase cost) in the Q2 worksheet. Report the results for order quantity 25 in Answersheet.
2. Report the Q value with the minimum total cost and the corresponding total cost in Answersheet.
C. 1 a Annual setup ordering cost Holding cost Purchasing cost Total cost 25 50 75 100 125 150 6 10 10 12Explanation / Answer
In the question,
D= 1000 units
Ordering or set up cost S=$25
Carry or holding cost H=$10 per year per unit
Purchase cost C=$500 per unit
EOQ =?(2*D*S/H) =?(2*1000*25/10) =70.71=71 units
Answer 1:- Results for Quantity Q=25 are as below:-
Annual Set up ordering cost =$1000
Holding Cost = $125
Purchasing cost =$500000
Total Cost =$501125
Answer 2:- Q value with the minimum total cost are 50 and 100 units having the total cost of $500750
Q Annual Set up ordering cost (S*D/Q) Holding Cost (H*Q/2) Purchasing Cost (C*D) Total Cost 25 1000 125 500000 501125 50 500 250 500000 500750 75 333.33 375 500000 500708.33 100 250 500 500000 500750 125 200 625 500000 500825 150 166.67 750 500000 500916.67Related Questions
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