Problem 2.5 Mail Order House A mail order house uses 18,000 boxes per year. Carrying costs are $0.60 per box per year. Ordering costs are $96. The following price schedule applies. Number of boxes 1,000 to 1,999 Price per box $1.25 $1.20 $1.15 $1.10 2,000 to 4,999 5,000 to 9,999 10,000 or more EOQ = SQRT(2DS/H) Common minimum Q = SQRT((2*18000*96/.6)= a. Find the optimal order quanity. 2400 boxes Total Cost at 2400 = Carrying Cost+Order Cost+Purchase Cost (Q/2)H + (D/Q)S + PD (2400/2)*.6+(18000/2400)*96+1.20*18000 $23,040 Total Cost at 5000 = Total Cost at 10,000 = b. Number of orders per year.
Problem 2.5 Mail Order House A mail order house uses 18,000 boxes per year. Carrying costs are $0.60 per box per year. Ordering costs are $96. The following price schedule applies. Number of boxes 1,000 to 1,999 Price per box $1.25 $1.20 $1.15 $1.10 2,000 to 4,999 5,000 to 9,999 10,000 or more EOQ = SQRT(2DS/H) Common minimum Q = SQRT((2*18000*96/.6)= a. Find the optimal order quanity. 2400 boxes Total Cost at 2400 = Carrying Cost+Order Cost+Purchase Cost (Q/2)H + (D/Q)S + PD (2400/2)*.6+(18000/2400)*96+1.20*18000 $23,040 Total Cost at 5000 = Total Cost at 10,000 = b. Number of orders per year.
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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Transcribed Image Text:Problem 2.5 Mail Order House
A mail order house uses 18,000 boxes per year. Carrying costs are $0.60 per box per year.
Ordering costs are $96. The following price schedule applies.
Number of boxes
1,000 to 1,999
Price per box
$1.25
$1.20
$1.15
$1.10
2,000 to 4,999
5,000 to 9,999
10,000 or more
EOQ = SQRT(2DS/H)
Common minimum Q = SQRT((2*18000*96/.6)=
a. Find the optimal order quanity.
2400 boxes
Total Cost at 2400 = Carrying Cost+Order Cost+Purchase Cost
(Q/2)H + (D/Q)S + PD
(2400/2)*.6+(18000/2400)*96+1.20*18000
$23,040
Total Cost at 5000 =
Total Cost at 10,000 =
b. Number of orders per year.
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