Please Check the first 3 and answer the last 2 questions, Thank you An electroni
ID: 370483 • Letter: P
Question
Please Check the first 3 and answer the last 2 questions, Thank you
An electronic store stocks and sells a partucular brand of personal computer.
It costs the firm $450 each time it places an order with the manufacturer.
The cost of carrying one computer in inventory for a year is $170. Estimated
total annual demand is 1,200 units, with a constant demand rate throughout
the year. The lead time for the orders to be received is 10 days. The store is
open for business every day of the year except Christmas Day.
1.What is optimal order quantity per order.? (The Answer I Got not sure if right) 79.7
2.Minimum total annual inventory costs.? (The Answer I Got not sure if right) 13549.91
3.The optimum number of orders per year?(The Answer I Got not sure if right) 15.056
B) Now, assume that shortages are allowed and shortage cost is $600 per unit per year, answer following 2 questions.
4.How much will be the reduction in total cost per year?
5.What's the maximum number of days a customer will have to wait?
Please Check the first 3 and answer the last 2 questions, Thank you
An electronic store stocks and sells a partucular brand of personal computer.
It costs the firm $450 each time it places an order with the manufacturer.
The cost of carrying one computer in inventory for a year is $170. Estimated
total annual demand is 1,200 units, with a constant demand rate throughout
the year. The lead time for the orders to be received is 10 days. The store is
open for business every day of the year except Christmas Day.
Explanation / Answer
EOQ=((2*Demand*Ordering cost)/Holding cost) =((2 *1200 * 450) / 170) = 79.7
Total Cost = Demand/Q(Ordering cost) + Q/2(Holding Cost) = 1200/80(450) + 80/2(170) = $13,550
All the 3 answers correct
Shortage cost = $600
Q = ((2*Ordering cost*Demand)/Inventory cost * ((shortage cost+Inventory cost)/Shortage cost)))
= ((2*450*1200/170)*((600+170)/600))
=90.3
S=Q*(Inventory cost/(Inventory cost+Shortage cost)
=90.3*(170/(170+600))
=19.9
Total cost=(Inventory cost*S*S)/2Q + Inventory cost *(Q-S)*(Q-S)/2*Q + Ordering cost*(Demand/Q)
=(600*19.9*19.9)/2*90.3 + 170(90.3-19.9)(90.3-19.9)/2*90.3 + 450*1200/90.3
=$11960.98