Please answer all these questions in detail and have the order of operations cle
ID: 357280 • Letter: P
Question
Please answer all these questions in detail and have the order of operations clearly shown ex.(don’t use only * ^ etc on the answers) have it on some sort of computer style on it not hand written. A natural food store carries a brand of coffee called World's Greatest Coffee. The following data should be used in your calculations. Demand/Sales 10 cases of coffee per week (you will need to convert this to an annual amount) Ordering Cost- Carrying Charge 18% per year Unit Cost- $75 per case Answer the following questions and be sure to show your computations. You can use whatever symbol you need for square root, if typing in Word 1 How many cases should be ordered at a time? (This number will be the EOQ) 2. How often should the coffee be ordered? 3. What is the annual cost or ordering the coffee? What is the annual cost of carrying the coffee? And what is the total cost (ordering and carrying costs added together)? 4. What factors might cause the firm to order a larger or smaller amount than the EOQ?Explanation / Answer
Weekly demand d = 10 cases/week => Annual Demand D = 10*52 = 520 cases.
Ordering cost S = 12 $/order
Unit Cost C = 75 $/case
Carrying Charge H = 18%/year = 0.18*75 = 13.5 $
Q1) EOQ = SQRT(2*D*S/H) = SQRT(2*520*12/13.5) = 31 cases.
Q2) Number of orders = D/Q = 520/31 = 17.
Frequency of orders = 365/17 = 21 days (approx)
Q3) Annual ordering cost = 17*12 = 204 $ (approx)
Annual carrying cost = (31/2)*13.5 = 223 $ (approx)
Total cost = 204+223 = 427 $
Q4) The factors that might cause the firm to order a larger or smaller amount than the EOQ include -
i) Holding cost change
ii) Ordering cost change
iii) Fluctuations in demand
Q4)