The campus store at a large Midwestern university sells writing tablets to students, faculty, and staff. They sell more tablets near exam time. During a typical 10-week quarter,the pattern of sales is 2,280, 1,120, 360, 3,340, 1,230, 860, 675, 1,350, 4,600, 1,210.Thepads cost the store $1.20 each, and holding costs are based on a 30 percent annual interest rate. The cost of employee time, paperwork, and handling amounts to $30 per order.Assume 50 weeks per year.b. The bookstore manager has decided that it would be more economical if thedemand were the same each week. In order to even out the demand he limits weeklysales (to the annoyance of his clientele). Hence, assume that the total demand forthe 10-week quarter is still the same, but the sales are constant from week to week.Determine the optimal order policy in this case and compare the total holding andordering cost over the 10 weeks to the answer you obtained in part (a). (You may assume continuous time for the purposes of your calculations, so that the optimal lotsize is the EOQ.)
The campus store at a large Midwestern university sells writing tablets to students, faculty, and staff. They sell more tablets near exam time. During a typical 10-week quarter,
the pattern of sales is 2,280, 1,120, 360, 3,340, 1,230, 860, 675, 1,350, 4,600, 1,210.The
pads cost the store $1.20 each, and holding costs are based on a 30 percent annual interest rate. The cost of employee time, paperwork, and handling amounts to $30 per order.
Assume 50 weeks per year.
b. The bookstore manager has decided that it would be more economical if the
demand were the same each week. In order to even out the demand he limits weekly
sales (to the annoyance of his clientele). Hence, assume that the total demand for
the 10-week quarter is still the same, but the sales are constant from week to week.
Determine the optimal order policy in this case and compare the total holding and
ordering cost over the 10 weeks to the answer you obtained in part (a). (You may assume continuous time for the purposes of your calculations, so that the optimal lot
size is the EOQ.)
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