Hello, I am having an issue wish this problem. So far, I onnly have the numbers
ID: 327850 • Letter: H
Question
Hello, I am having an issue wish this problem. So far, I onnly have the numbers for the formulas, and maybe part a (but not eve sure that is correct).
Demad = 25 units (a week), or 1,300 units for the year?, K=$25, H=$50
A.) I got 5 untis, but does not seem correct at all. I did sq.root (2(25)(25)/50) = 5
However, I am not sure of this because in the problem it says it is open for 52 weeks, so would that chnege the demand to 1,300, thus changing the order quantity. I am not sure. Any help would be awesome.
Thank You!
Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish. Ray has estimated that weekly demand for this model to be 25 units. His cost to carry one unit is $50 per year and the cost of placing an order with his supplier is $25. He's open 52 weeks a year. If Ray were to use the EOQ method, a. How many dishes should Ray order each time he places an order? b. What is the number of times Ray will order this dish each year? c. How many of this dish will he have on average in inventory? d. What is the time between one order and the next? e. What is the annual cost of using the EOQ model for this dish? f. Ray currently orders in quantities of 50 dishes per order. How much would he save or lose by switching to the EOQ?Explanation / Answer
Annual Demand, D = 1300 units
Order cost, K = $ 25
Holding cost, H = $ 50 per unit per year
a) EOQ = SQRT(2*D*S/H) = SQRT(2*1300*25/50) = 36 units
b) Number of times Ray will order every year = D/Q = 1300/36 = 36 times
c) Average inventory = Q/2 = 36/2 = 18 units
d) Time between orders = Order quantity / Weekly demand = 36/25 = 1.44 weeks
e) Annual cost of using EOQ model = (D/Q)*S+(Q/2)*H = (1300/36)*25+(36/2)*50 = $ 1803
f) Cost of current policy of order size of 50 = (1300/50)*25+(50/2)*50 = $ 1900
Saving by switching to EOQ model = 1900 - 1803 = $ 97
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