Problem1 A hover board retailer enjoys a constant demand of exactly 20 customers
ID: 344811 • Letter: P
Question
Problem1 A hover board retailer enjoys a constant demand of exactly 20 customers every week. The retailer is open 5 days a weck for 50 weeks per year. The cost of ordering and receiving shipments is S20 per order. Their accounting department estimates that annual carrying costs are $4.00 per unit. The supplier lead time for shipments of new products is 5 days. Each order is received from the supplier in a single delivery, 1. First, let's get our parameters organized and our symbols straight. Complete the following table. By "Symbol," I mean the letters that we use to refer to this quantity in formulas. Note that the number of Days Worked per Year" does not have a generally accepted symbol. By I mean the numerical value based on the description above. Note that the Optimal Order Size(.e, Economic Order Quantity) is the value we are trying to compute, so you will not be able to ill that in yet. Symbol Value Days Worked per Year Annual Demand Daily Demand Setup Cost per Order Annual Holding Cost per Unit Optimal Order Size Supplier Lead Time Safety Stock days/year units/'year units/day order unit per year days units For the remaining questions,first write down the relevat formala, then plug in numbers to get an answer, in order to get full poirts 2. What quantity should the retailer order with each order?Explanation / Answer
Problem 1:
1) Days worked per year = 50 weeks x 5 days = 250 days
Annual demand (D) = Weekly demand x number of weeks per year = 20 customers x 50 weeks = 1000 units per year
Daily demand (d) = Annual demand / number of days per year = 1000 units / 250 days = 4 units
Set up cost per order(S) = $20 per order
Annual holding cost per unit(H) = $4 per unit per year
Supplier lead time (L) = 5 days
2) Economic order quantity (Q) = sqrt of (2DS /H)
= sqrt of [(2 x 1000 x 20)/4]
= sqrt of 10000
= 100 units
So the retailer should order 100 units with each order.
3)Number of orders per year = D/Q = 1000/100 = 10 times
4) Time between orders = Number of working days per year / number of orders per year = 250/10 = 25 days
5) If the safety stock is 15 units,
Reorder point = d x L + Safety stock
= 4 x 5 + 15
= 20 + 15
= 35 units
6)Annual ordering cost = (D/Q) S = (1000/100)20 = $200
Annual holding cost = (Q/2)H = (100/2)4 = $200
Total annual cost = Ordering cost + Holding cost
= $200 + $200
= $400
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.