CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price-break and other data for the problem: Price of copper $ 0.84 per pound up to 2,499 pounds $ 0.83 per pound for orders between 2,500 and 4,999 pounds $ 0.81 per pound for orders 5,000 pounds or greater Annual demand 54,000 pounds per year Holding cost 25 percent per unit per year of the price of the copper Ordering cost $ 30 Which quantity should be ordered? Quantity_____________pounds

CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price-break and other data for the problem: Price of copper $ 0.84 per pound up to 2,499 pounds $ 0.83 per pound for orders between 2,500 and 4,999 pounds $ 0.81 per pound for orders 5,000 pounds or greater Annual demand 54,000 pounds per year Holding cost 25 percent per unit per year of the price of the copper Ordering cost $ 30 Which quantity should be ordered? Quantity_____________pounds

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter3: Introduction To Optimization Modeling

Section3.8: A Multiperiod Production Model

Problem 22P

See similar textbooks

Problem 20-39 (Algo)


Price of copper	$	0.84	per pound up to 2,499 pounds
	$	0.83	per pound for orders between 2,500 and 4,999 pounds
	$	0.81	per pound for orders 5,000 pounds or greater
Annual demand		54,000	pounds per year
Holding cost		25	percent per unit per year of the price of the copper
Ordering cost	$	30

Which quantity should be ordered?

Quantity_____________pounds

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1; Explanations

VIEW

Step 2; Calculation of holding costs

VIEW

Step 3; Calculations of EOQ

VIEW

Step 4; Calculate the total costs

VIEW

Final Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Problem 20-40 (Algo) In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $ 1,600 11 $ 13,200 2 12,200 12 700 3 2,300 13 42,400 4 50,500 14 10,100 5 11,600 15 1,300 6 900 16 10,400 7 2,100 17 4,100 8 11,200 18 61,600 9 5,200 19 3,600 10 15,200 20 3,000 a. Classify each item in inventory using an ABC plan.
The store wants to determine the Economic Order Size (EOQ) and Total Inventory Cost for this brand of carpet given an estimated annual demand of 10,000 yards of carpet, an annual carrying cost of P 37.50 per yard, and an ordering cost of P 7,500.00. The store would also like to know the number of orders that will be made annually and the time between orders (i.e., the order cycle), given that the store is open every day except 52 Sundays, Philippine Independence Day, New Year, and Christmas Day (which are assumed to fall not on Sundays) A. Using the computed optimal order size or EOQ, determine the optimum Total Cost. C. Determine the Order Cycle Time
Please complete the sup part: e,f and g. 1.B&H needs to decide how to manage its inventory of cameras. The demand for cameras at B&H is 200 cameras per week. Each time that B&H places an order for a new shipment of cameras, it must pay $80 in fixed processing fees. A camera costs B&H $60 to purchase. The cost for B&H to hold a camera in its store for one week is $4. Assume that the lead time for the delivery of a camera is 0 weeks.a. Suppose that B&H places orders for cameras in quantities of 50 cameras at a time and places a new order for cameras each time that it runs out. Draw a graph showing the number of cameras that B&H has on-hand in inventory at each point in time up until the time when it places its fourth-order. Label the points in time at which B&H places a new order. Assume that B&H places its first order for 50 cameras on day 0.b. Suppose again that B&H places orders for 50 cameras at a time. What will be B&H’s average holding…
The maintenance department of a large hospital uses 816 cases of liquid cleaner annually. Ordering costs are $12, carrying costs are $4 per case per year, and the new price schedule indicates that orders of less than 50 cases will cost $20 per case, 50 to 79 cases will cost $18 per case, 80 to 99 cases will cost $17 per case, and larger orders will cost $16 per case. Determine the optimal order quantity and the total cost
Exercise 2: The demand per year (D) for product X is 12,100 units. The costs of placing an order (S) are $4.50. The unit cost (C) of the item is $25.00. The maintenance cost (H) per unit per year is 30% of the item's cost. 1. Use the economic order quantity (EOQ) model to determine: *Optimal quantity to order* The expected number of orders*Optimal time between orders*The total annual cost of maintaining that optimal amountNOTE: Show calculations of how you arrived at each amount 2. Answer, what are the potential benefits of using EOQ analysis for inventory management? How can you help businesses strike a balance between inventory holding costs and ordering costs?
Consider that you work at Kroger Grocery store, and that you've been tasked with creating an ABC inventory classification for 6 items. The 6 items, as well as their profit per case and number of cases sold per week, are as follows:Ribeye Steak - $135 in profit per case, 3 cases sold per weekLobster Tail - $245 in profit per case, 3 cases sold per weekPasta - $23 in profit per case, 12 cases sold per weekSalt - $3 in profit per case, 2 cases sold per weekNapkins - $12 in profit per case, 2 cases sold per weekTomato Sauce - $23 in profit per case, 11 cases sold per weekUsing total weekly profits, please classify each products into A, B, or C categories. Which items form the boundary of the class A and B items in your classification, and why? Which items form the boundary of the class B and C items in your classification, and why?
The maintenance department of a large hospital uses about 816 cases of liquid cleanserannually. Ordering costs are $12, carrying costs are $4 per case a year, and the new priceschedule indicates that orders of less than 50 cases will cost $20 per case, 50 to 79 caseswill cost $18 per case, 80 to 99 cases will cost $17 per case, and larger orders will cost $16per case. Determine the optimal order quantity and the total cost.
In economic order quantity EOQ model, manimum level of inventory is a. the same as the level of inventory at the time of placing an order b. EOQ c. Recorder point plus EOQ d. None of the answers e. EOQ minus recoder point
The demand for a clothing brand is shown in the table below. The cost per order is about $4000. Cost of each unit of clothing = $5. Carrying cost percentage = 25% per item per 5 months. The analysis period = 5 month duration. Month Demand 1 400 2 300 3 200 4 400 5 500 a. Using this data, compute the solutions using the Lot for Lot and Periodic Order Quantity heuristics? Which of these heuristics would perform better and why? b. Assuming that the demand follows a normal distribution with the mean and variance from the data given above, determine the optimal order should be greater or lesser than the single period EOQ model.
Please solve this. Lebar Daun Sdn Bhd is planning to use the economic order quantity model to determine the optimal order levels of raw materials. Material Z is consumed evenly over the year and the current usage is 120,000 units. The material is purchased in boxes and each box contains 12 units of material Z, at a price of RM252 per box. A safety stock of 200 boxes is kept. The cost of placing and handling orders is estimated to be RM6,300, which is based cost incurred for similar orders that have already made. The cost of RM6,300 was for 30 orders. The inflation of 2 per cent should be added to the above ordering costs. Besides, the company estimates to be charged the transporation cost of RM15 per order. It should be assumed that ordering costs change in proportion to the number of orders place. Other costs which relate to material Z such as insurance, interest and space costs for a year, were calculated at 15 % of the purchase price. Required: a. Calculate the order quantity that…
The Olde Town Microbrewery makes Townside beer,which it bottles and sells in its adjoining restaurant and bythe case. It costs $1700 to set up, brew, and bottle a batchof the beer. The annual cost to store the beer in inventory is$1.25 per bottle. The annual demand for the beer is 21,000bottles and the brewery has the capacity to produce 30,000bottles annually.a. Determine the optimal order quantity, total annual inventory cost, the number of production runs per year, andthe maximum inventory level.b. If the microbrewery has only enough storage space tohold a maximum of 2500 bottles of beer in inventory,how will that affect total inventory costs?
A manufacturer of exercise equipment purchases the pulley section of the equipment from a supplier who lists these prices: less than 1,000, $5 each; 1,000 to 3,999, $4.95 each; 4,000 to 5,999,$4.90 each; and 6,000 or more, $4.85 each. Ordering costs are $50, annual carrying costs per unitare 40 percent of purchase cost, and annual usage is 4,900 pulleys. Determine an order quantitythat will minimize total cost.