This Question: 1 pt 7 of 10 (7 complete) This Quiz: 10 pts possible One of the p
ID: 375967 • Letter: T
Question
This Question: 1 pt 7 of 10 (7 complete) This Quiz: 10 pts possible One of the products stocked by a Sam's Club store is Sams Cola, which is sold in cases. The demand level for Sams Cola is highly seasonal: During the slow season, the demand rate is approximately 750 cases a month, which is the same as a yearly demand rate of 750 x 12 9,000 cases. During the busy season, the demand rate is approximately 1,500 cases a month, or 18,000 cases a year. The cost to place an order is $4, and the yearly holding cost for a case of Sams Cola is $7. a. The EOQ for the slow season is 102 cases. (Enter your response rounded to the nearest whole number) The EOQ for the busy season is 144 cases. (Enter your response rounded to the nearest whole number.) b. Suppose Sam's Club decides to use the same order quantity, Q 190, throughout the year. Do not consider safety stock. (Annual demand can be calculated as an average of the slow and busy rates given above.) The total holding and ordering costs for the year is S (Enter your response rounded to the nearest dollar.)Explanation / Answer
Ordering cost (S) = $4
Holding cost (H) = $7
a) For the slow season annual demand (D) =9000 cases
So EOQ for slow season = sqrt of (2DS /H)
= sqrt of [(2x9000x4) / 7]
= 101.4 or rounded to 101 cases
b) For the busy season Annual demand (D) = 18000 cases
So EOQ for busy season = sqrt of (2DS /H)
= sqrt of [(2x 18000 X 4) / 7]
= 143.4 or rounded to 143 cases
C) Annual demand (D) = Average of slow and busy demand
= (9000 + 18000) / 2
= 27000/2
= 13500 cases.
Order quantity (Q) = 190 cases
Total Holding and ordering cost = Holding cost + ordering cost
= [(Q/2) H] + [(D /Q) S]
= [(190/2)7] + [(13500/190)4]
= $665 + $284.21
=$949. 21 or rounded to $949
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.