Leilani Lavender's law office has traditionally ordered ink refills 60 units at a time. The firm estimates that carrying cost is 40% of the $10.00 unit cost and that annual demand is about 240 units per year. The assumptions of the basic EOQ modelare thought to apply.a) For what value of ordering cost would its action be optimal?Its action would be optimal given an ordering cost of $per order (round your response to two decimal places).b) If the true ordering cost turns out to be much greater than your answer to part (a), what is the impact on the firm's ordering policy?A. The order quantity should be increased.B. The order quantity should not be changed.C. The order quantity should be decreased.

Answered: Image /qna-images/answer/c283dc8f-ad7f-4978-832d-12bfe7e55b60.jpg

Answered: a) For what value of ordering cost…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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2. Henry Crouch's law office has traditionally ordered ink refills 55 units at a time. The firm estimates that carrying cost is 35% of the $9 unit cost and that annual demand is about 245 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? Part 2 a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $enter your response here per order (round your response to two decimal places). b) If the true ordering cost turns out to be much greater than your anser to part (a) what is the impact on the firm's ordering policy?
Leilani Lavender's law office has traditionally ordered ink refills 65 units at a time. The firm estimates that carrying cost is 45% of the $9 unit cost and that annual demand is about 235 units per year. The assumptions of the basic EOQ model are thought to apply. For what value of ordering cost would its action be optimal? Part 2 a) For what value of ordering cost would its action be optimal? Its action would be optimal given an ordering cost of $___per order
Ground Coffee shop uses 3 kgs of a specialty tea weekly; each kg. costs 16 MU.Carrying costs are 2 MU/kg/week because space is very scarce. It costs the firm 7 MU toprepare an order. Assume the basic EOQ model with no shortages applies. Assume 52weeks/year.a) How many kgs should Ground to order at a time?b) What is total annual inventory cost?c) How many orders should ground place annually?d) How many days will there be between orders(assume 310 operating days)? Please mention formulas and do it in detail so I can understand.
Gamin Inc. produces various GPS devices with a wide assortment of different models for its customers. One item, RC1 is very popular. Keen of keeping its stock under control, a decision is taken to order only the optimum economic quantity, for this item, each time. You have the following information. Annual demand (units) 115,200 Purchase price per unit $ 300 Carrying/Holding costs per unit $ 8 Cost per order $ 200 Required: a.Determine the EOQ using the equation method. b.Fill the blanks in the following table using the above data. No. of orders 1 10 20 30 90 120 Order size Average stock Carrying (Holding) costs Order costs Total costs Calculate the holding, ordering cost & their total cost at the EOQ level. Plot the graph at the EOQ level showing the…
Gamin Inc. produces various GPS devices with a wide assortment of different models for its customers. One item, RC1 is very popular. Keen of keeping its stock under control, a decision is taken to order only the optimum economic quantity, for this item, each time. You have the following information. Annual demand (units) 115,200 Purchase price per unit $ 300 Carrying/Holding costs per unit $ 8 Cost per order $ 200 Required: Determine the EOQ using the equation method. Fill the blanks in the following table using the above data. No. of orders 1 10 20 30 90 120 Order size Average stock Carrying (Holding) costs Order costs Total costs Calculate the holding, ordering cost & their total cost at the EOQ level. Plot the graph at the EOQ level showing the…
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Compute the economic order quantity. Economic order quantity = 1600 Compute the ordering, carrying, and total costs for the EOQ. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Dream Resorts buys custom - made boxes in bulkand uses them to pack its wine, which it bottles and sells in its on - location Restaurant/ Wine shop. The annual requirement of these boxes is 1200 and each box costs $30. The ordering and carrying costs are $10 per order and 20%, respectively. The supplier from whom Dream Resorts purchases these boxes sells them only in lots of 20, that is, you only purchase quantities in multiples of 20 boxes. Required: a) How many boxes should the confectioner order so as to minimise inventory total stocking costs? b) If the supplier offers 2% discount on the cost of each box when the purchases are in quantities of 300 at a time, should the confectionewr accept this offer? c) Suppose the supplier has decided that instead of the 2% discount offer, a price reduction of $0.25 will be used for the order quantities as shown in Table Q1: Table Q1 Order quantity Cost per box Less than 100 $30.00 100 to 199 $29.75 200 or more $29.50 What order…
The Bucks Grande exhibition baseball team plays 50 weeks each year and uses an average of 350 baseballs per week. The team orders baseballs from Coopers-Town, Inc., a ball manufacturer noted for six-sigma–level consistency and high product quality. The cost to order baseballs is $100 per order and the annual holding cost per ball is 38 percent of the purchase price. Coopers-Town’s price structure is: Order Quantity Price per Unit 1–999 ........ $7.50 1,000–4999 ...... $7.25 5,000 or more ..... $6.50 a. How many baseballs should the team buy per order? b. What is the total annual cost associated with the best order quantity? c. Coopers-Town, Inc., discovers that, owing to special manufacturing processes required for the Buck’s base-balls, it has underestimated the setup time required on a capacity-constrained piece of machinery. Coopers-Town adds another category to the price structure to provide an incentive for larger orders and thereby hopes to reduce…
The Bucks Grande exhibition baseball team plays 50 weeks each year and uses an average of 350 baseballs per week. The team orders baseballs from Coopers-Town, Inc., a ball manufacturer noted for six-sigma-level consistency and high product quality. The cost to order baseballs is $100 per order and the annual holding cost per ball is 38 percent of the purchase price. Coopers-Town’s price structure is: Order Quantity Price per Unit 1–999 $7.50 1,000–4999 $7.25 5,000 or more $6.50 a. How many baseballs should the team buy per order? b. What is the total annual cost associated with the best order quantity? c. Coopers-Town, Inc., discovers that, owing to special manufacturing processes required for the Buck’s baseballs, it has underestimated the setup time required on a capacity-constrained piece of machinery. Coopers-Town adds another category to the price structure to provide an incentive for larger orders and thereby hopes to…
Henry Crouch's law office has traditionally ordered inkrefills 60 units at a time. The firm estimates that carrying cost is 40%of the $ 10 unit cost and that annual demand is about 240 units peryear. The assumptions of the basic EOQ model are thought to apply.a) For what va lue of ordering cost would its action be optimal?b) If the true ordering cost turns out to be much greater than youranswer to (a), what is the impact on the firm's ordering policy?
Sharp, Inc., a company that markets painless hypodermic needles to hospitals, would like to reduce its inventory cost by determining the optimal number of hypodermic needles to obtain per order. The annual demand is 1,000 units; the setup or ordering cost is $10 per order; and the holding cost per unit per year is $.50. If D increases to 1,200 units, what is the new Q *? If Sharp has a 250 day working year, find out what is the number of Orders (N) What is the expected time between orders What is the total cost? 2. Lindsay Electronics, a small manufacturer of electronic research equipment, has approximately 7,000 items in its inventory and has hired Joan Blasco-Paul to manage its inventory. Joan has determined that 10% of the items in inventory are A items, 35% are B items, and 55% are C items. She would like to set up a system in which all A items are counted monthly (every 20 working days), all B items are counted quarterly (every 60 working days), and all C items are…
Henry Crouch’s law office has traditionallyordered ink refills 60 units at a time. The firm estimates thatcarrying cost is 40% of the $10 unit cost and that annualdemand is about 240 units per year. The assumptions of thebasic EOQ model are thought to apply.a) For what value of ordering cost would its action be optimal?b) If the true ordering cost turns out to be much greater thanyour answer to (a), what is the impact on the firm’s ordering policy?

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