Please show all work. The Bucks Grande exhibition baseball team plays 50 weeks e
ID: 366779 • Letter: P
Question
Please show all work.
The Bucks Grande exhibition baseball team plays 50 weeks each year and uses an average of 320 baseballs per week. The team orders baseballs from Coopers-Town Inc., a ball manufacturer noted for six gma level consistency and high product quality. The cost to order baseballs is $100 per order and the annual holding cost per ball is 37% of the purchase price. Coopers-Town's price structure is shown in the table below Order Quantity 1-999 1,000-4,999 5,000 or more Price per Unit $7.55 56.80 S6.75 a. How many baseballs should the team buy per order? The team should buybaseballs per order. (Enter your response rounded to the nearest whole number)Explanation / Answer
Annual requirement, D = 320*50 = 16,000
Ordering csot, K = $ 100
Holding cost, H = 7.55*0.37 = 2.79 (considering the initial price of 7.55)
Economic order quantity = (2*D*K/H) = (2*16000*100/2.79) = 1071
The applicable price for this quantity is 6.8 . We need to recalculate the unit holding cost and EOQ corresponding to this price.
Holding cost, H = 6.8*0.37 = 2.52
Revised EOQ = (2*16000*100/2.52) = 1128
Total Annual cost = (D/Q)*K + (Q/2)*H + D*P = (16000/1128)*100 + (1128/2)*2.52 + 16000*6.8 = $ 111,640
For the next price level, minimum order quantity is 5000. Total annual cost = (16000/5000)*100 + (5000/2)*6.75*0.37 + 16000*6.75 = $ 114,564
Total annual cost is minimum for EOQ (=1128)
a) The team should buy 1128 baseballs per order.
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