A manager receives a forecast for next year. Demand is projected to be 600 units for the first halfof the year and 900 units for the second half. The monthly holding cost is $2 per unit, and it costsan estimated $55 to process an order.a. Assuming that monthly demand will be level during each of the six-month periods covered bythe forecast (e.g., 100 per month for each of the first six months), determine an order size thatwill minimize the sum of ordering and carrying costs for each of the six-month periods.b. Why is it important to be able to assume that demand will be level during each six-month period?c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in eitherperiod? If so, what order size would you recommend?

A manager receives a forecast for next year. Demand is projected to be 600 units for the first halfof the year and 900 units for the second half. The monthly holding cost is $2 per unit, and it costsan estimated $55 to process an order.a. Assuming that monthly demand will be level during each of the six-month periods covered bythe forecast (e.g., 100 per month for each of the first six months), determine an order size thatwill minimize the sum of ordering and carrying costs for each of the six-month periods.b. Why is it important to be able to assume that demand will be level during each six-month period?c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in eitherperiod? If so, what order size would you recommend?

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Description: A manager receives a forecast for next year. Demand is projected to be 600 units for the first halfof the year and 900 units for the second half. The monthly holding cost is $2 per unit, and it costsan estimated $55 to process an order.a. Assuming th

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
A manager receives a forecast for next year. Demand is projected to be 600 units for the first half of the year and 920 units for the second half. The monthly holding cost is $2 per unit, and it costs an estimated $55 to process an order. a.Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for each of the six-month periods. (Round your answers to the nearest whole number.) Period Order Size 1 – 6 months?_____units 7 – 12 months?_____units b.If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either period? If so, what order size would you recommend? (Round intermediate calculations to 2 decimal places.) Period Order Size 1 – 6 months?____ units 7 – 12 months?____…
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