need help with question 3 and 4! A toy shop carries a model car with the demand
ID: 449777 • Letter: N
Question
need help with question 3 and 4!
A toy shop carries a model car with the demand of 100 cars per month. The cars cost $40 each, and ordering cost is $25 per order. The annual holding cost rate is 12%. Determine the EOQ and total annual cost. Assume $30 per-unit per-year backorder cost, determine the minimum cost inventory polio- and total annual cost for the model cars What is the maximum number of days a customer would have to wait for a backorder under the policy in part (b)? Assume that the toy shop is open for business 250 days per year. Would you recommend a no-backorder or a backorder inventory policy for this product? Explain. If the lead time is six days, what is the reorder point for both the no-backorder and backorder inventory policies? Consider the EOQ model with quantity discounts to the following data where D = 2000 units per year, C_0 = $I00 and the annual holding cost rate is = 15%. What order quantity would you recommend.Explanation / Answer
4.
D = 2000
Co = $100
H = 15% = 0.15
When C = $10
EOQ = Sqrt((2 * D * Co)/(H*C)) = Sqrt((2 * 2000 * 100)/(0.15*10)) = 516.3978
It is not the EOQ, As it does not lies in the range (0 – 500).
When C = $9.75
EOQ = Sqrt((2 * D * Co)/(H*C)) = Sqrt((2 * 2000 * 100)/(0.15*9.75)) = 522.9764
It is the EOQ, As it lies in the range (500 - 1000).
Now Calculate the Total Cost for each cost level.
TC = (D* C) + ((D/Q)*Co) + (Q/2)*C*H))
When C = $9.75, Q = EOQ = 523
TC = (2000*9.75) + ((2000/523)*100) + ((523/2)*0.15*9.75) = 20264.85
When C = $9.5, Q = 1000
TC = (2000*9.5) + ((2000/1000)*100) + ((1000/2)*0.15*9.5) = 19912.5
When C = $9.25, Q = 1500 19673.96
TC = (2000*9.25) + ((2000/1500)*100) + ((1500/2)*0.15*9.25) = 19673.96
When C = $9, Q = 2000
TC = (2000*9) + ((2000/2000)*100) + ((2000/2)*0.15*9) = 19450
Comparing all the cost , we can conclude that at C = $9 and Q = 2000 it is minimum. Order Quantity to be recommended is 2000 or above.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.