1. Wing Computer Corporation of Xiamen, China, uses 15,000 keyboards each year i
ID: 445699 • Letter: 1
Question
1. Wing Computer Corporation of Xiamen, China, uses 15,000 keyboards each year in the production of computer terminals for major computer manufacturers headquartered in Taiwan. Order cost for the keyboards is 50 renminbi, and the holding cost for one keyboard is 1.5 renminbi per unit per year.
If Wing orders 1250 per month, what will be the total annual cost?
a. 1100 to 1200
b. 1300 to 1400
c. 1500 to 1600
d. 1700 to 1800
2. MamaMia's Pizza purchases its pizza delivery boxes from a printing supplier. MamaMia's delivers on average 300 pizzas each month (assume deterministic demand). Boxes cost 30 cents each, and each order costs $20 to process. Because of limited storage space, the manager wants to charge inventory holding at 40 percent of the cost. The lead time is 7 days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine the economic order quantity.
a. 1000 to 1100
b. 1200 to 1300
c. 1400 to 1500
d. 1600 to 1700
3. Crew Soccer Shoes Company is considering a change in its current inventory control system for soccer shoes. The information regarding the shoes is as follows:
Average demand = 250 pairs/week
Lead time = 2 weeks
Order cost = $60/order
Unit cost = $30
Carrying charge rate = 0.30
Number of weeks per year = 52
The company decides to use a fixed-order-quantity system (EOQ). What is the EOQ? What is the reorder point?
a. 380 to 400; 480 to 510
b. 380 to 400; 510 to 530
c. 400 to 420; 480 to 510
d. 400 to 420; 510 to 530
Explanation / Answer
1. Total annual cost = (Annual Demand / Order Quantity) * Ordering Cost + ( (Odrer Quantity / 2) * Holding Cost)
= (12 * 50) + (625 * 1.5) = 1537.5
c. 1500 to 1600
2. the economic order quantity = Sqrt((2 * Annual Demand * Ordering Cost ) / (Holding Cost * Unit price))
= Sqrt (( 2*300*12*20) / (0.40*0.30)) = 1095.45
a. 1000 to 1100
3. EOQ = Sqrt((2 * Annual Demand * Ordering Cost ) / (Holding Cost * Unit price))
= Sqrt(( 2*52*250*60) / (30*0.3)) = 416.33
Reorder Point = d x L = 250 * 2 = 500
c. 400 to 420; 480 to 510
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