Demand for an item is 1.900 units per year. Each order placed costs $20: the ann

Question

Demand for an item is 1.900 units per year. Each order placed costs $20: the annual cost to carry items in inventory is $4 each. In what quantities should the item be ordered? (Round your answer to the nearest whole number.) A particular raw material is available to a company at three different prices, depending on the size of the order The cost to place an order is S30. Annual demand is 4.300 units. Holding (or carrying) cost is 20 percent of the material price. What is the economic order quantity to buy each time, and its total cost? (Round your answers to the nearest whole number.) Johnson Plastics makes and sells, among many other things, specialty plastic display cases for retail stores. Johnson's expected annual demand for the display cases is 3.200 units, and average daily demand is 6 units. The production process is most efficient when 14 units per day are produced at a cost of $155 per unit. Setup cost is $15. Inventory carrying cost at Johnson is determined to be 10 percent annually. What is the best production order quantity? (Round up your answer to the next whole number.) How many days is a required production run? (Round your answer to 3 decimal places.) Ray's Satellite Emporium wishes to determine the best order size for its best-seling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1.750 units. His cost to cany one unit is S95 per year per unit, and he has estimated that each order costs $36 to place. Using the EOQ model, how many should Ray order each time? (Round your answer to the nearest whole number.)

Explanation / Answer

Answer:

Economic Order Quantity, EOQ = {(2 x Annual Demand x Ordering Cost per Order) / Carrying Cost per unit per annum}1/2

3. Annual Demad = 1,900 units; Ordering Cost per Order = $ 20 and Carrying Cost per unit = $ 4; therefore, EOQ = {(2 x 1,900 x 20) / 4}1/2 = 137.84 or 138 units.

6. By try and error we find that EOQ for the given question will be between order size 100 to 999, therefore we are using carrying cost of $ 5.80 per unit per annum being 20% of $ 29. Hence,

EOQ = {(2 x 4,300 x 30) / 5.8}1/2 = 210.91 or 211 units.

and Total Cost = (4,300 x $ 29) + (4300 x 30 / 211) + 20% of 211x 29/2 = $ 124,700 + $ 611.37 + $ 611.90 = $ 124,700 + $ 612 + $ 612 = $ 125,924

8. Production Order Quantity = {(2 x Set Up Cost x Demand Rate) / Production Cost x Interest Rate}1/2 = {(2 x $ 15 x 3,200) / $ 155 x 0.10}1/2 = 78.699 or 79 units

Number of Production Run = 3,200 / 79 = 40.50 or 41 production runs.

2. EOQ = {(2 x 1,750 x 36) / 95}1/2 = 36.41 or 37 units.

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