Cress Electronic Products manufactures components used in the automotive industry. Cress purchases parts for use in its manufacturing operation from a variety of different suppliers. One particular supplier provides a part where the assumptions of the EOQ model are realistic. The annual demand is 5000 units, the ordering cost is $80 per order, and the annual holding cost rate is 25%. a. If the cost of the part is $20 per unit, what is the economic order quantity?b. Assume 250 days of operation per year. If the lead time for an order is 12 days, what is the reorder point?

Economic order quantity is the optimal quantity that the business needs to buy the inventory to…

Answered: a. If the cost of the part is $20 per…

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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Cress Electronic Products manufactures components used in the automotive industry. Cress purchases parts for use in its manufacturing operation from a variety of different suppliers. One particular supplier provides a part where the assumptions of the EOQ model are realistic. The annual demand is 5000 units, the ordering cost is $80 per order, and the annual holding cost rate is 25%.

a. If the cost of the part is $20 per unit, what is the economic order quantity?

b. Assume 250 days of operation per year. If the lead time for an order is 12 days, what is the reorder point?

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