Concept explainers
(a)
To determine:
Graph of average cost per unit, C(Q)/Q, according to the given
Introduction: Economic order quantity sometimes EOQ refers to the technique used by the organizations to determine the volume and frequency or order needed to fulfill the customer demand while minimizing the cost of the item.
(b)
To determine: Graph the function
Introduction: Economic order quantity sometimes EOQ refers to the technique used by the organizations to determine the volume and frequency or order needed to fulfill the customer demand while minimizing the cost of the item.
(c)
To determine:Redo of part b for
Introduction: Economic order quantity sometimes EOQ refers to the technique used by the organizations to determine the volume and frequency or order needed to fulfill the customer demand while minimizing the cost of the item.
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EBK PRODUCTION AND OPERATIONS ANALYSIS
- In the basic EOQ model, if annual demand is 140, holding cost is $3.38 (per unit per year), and total inventory related cost on the basis of EOQ is $410, the EOQ(rounded to the next whole number) is: Select one: a. 122 b. 205 c. 10 d. 70arrow_forwardCatlea Merchandising is engaged in selling school shoesfor both boys and girls in their teenage years. Catlea needs 32,000 pairs of shoes in a year in order to satisfy the market demand. It costs ₱ 48 to place an order while ₱ 8 is needed to hold each quantity of shoe in Catlea's inventory. Upon checking on Catlea's supplier, it takes 8 days in between placing an order and eventually receiving it. a. Determine the Economic Order Quantityb. Determine the number of order per monthc. Determine the reorder pointarrow_forwardEOQ, reorder point, and safety stock Alexis Company uses 937units of a product per year on a continuous basis. The product has a fixed cost of $44 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.arrow_forward
- I NEED IT TODAY, 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 costs per week? What will…arrow_forwardDavid’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.b. How many salamis should Gold have on hand when he phones his brother tosend another shipment?arrow_forwardDavid’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.c. Suppose that the salamis sell for $3 each. Are these salamis a profitable itemfor Gold? If so, what annual profit can he expect to realize from this item?(Assume that he operates the system optimally.)arrow_forward
- David’s Delicatessen flies in Hebrew National salamis regularly to satisfy a growing demand for the salamis in Silicon Valley. The owner, David Gold, estimatesthat the demand for the salamis is pretty steady at 175 per month. The salamis costGold $1.85 each. The fixed cost of calling his brother in New York and having thesalamis flown in is $200. It takes three weeks to receive an order. Gold’s accountant, Irving Wu, recommends an annual cost of capital of 22 percent, a cost of shelfspace of 3 percent of the value of the item, and a cost of 2 percent of the value fortaxes and insurance.a. How many salamis should Gold have flown in and how often should he orderthem?arrow_forwardFor 8.4, suppose that Noname has 23,000 DRAM chips in inventory. It anticipates receiving a lot of 3,000 chips in week 3 from another firm that has gone out of business.At the current time, Noname purchases the chips from two vendors, A and B. A sells the chips for less, but will not fill an order exceeding 10,000 chips per week.a. If Noname has established a policy of inventorying as few chips as possible, what order should it be placing with vendors A and B over the next six weeks?b. Noname has found that not all the DRAM chips purchased function properly. From past experience it estimates an 8 percent failure rate for the chips purchased from vendor A and a 4 percent failure rate for the chips purchased from vendor B. What modification in the order schedule would you recommend to compensate for this problem?arrow_forwardEnergyzer , a regional electronics retailer , estimates that sells 13 , 000 4-packs of batteries per year (or 250 per week). Each 4-pack of batteries costs the retailer $2.00; with a carrying cost rate of 32%; and ordering costs of $40.00 per order. a. Calculate the optimum order period—in terms of weeks , b. Calculate the economic order quantity PLEASE SHOW WORKarrow_forward
- Lindsay Electronics, a small ma nufacturer of electronicresearch equipment, has approximately 7,000 items in itsinventory and has hired Joan Blasco-Paul to manage its inventory. Joan has determined that 10% of the items in inven toryare A items, 35% are B items, and 55% are C items. She wouldlike to set up a system in which all A items are counted monthly(every 20 working days), all B items are counted quarterly (every60 working days), and all C items are counted semiannually (every120 working days). How many items need to be counted each day?arrow_forwardY5 consider a continuous review system. on hand inventory equals 300, and there is a scheduled receipt of 35 units and a backorder for 335 units. if the reorder point is 800 units, how much should be ordered? The answer is EOQ amount but i would like to know how that is the correct answer.arrow_forward13.4. The Sofaworld Company purchases upholstery material from Barrett Textiles. The company uses 45,000 yards of material per year to make sofas. The cost of ordering material from the textile company is $1500 per order. It costs Sofaworld $0.70 annually to hold a yard of material in inventory. Determine the optimal number of yards of mate- rial Sofaworld should order, the minimum total inventory cost, the opti- mal number of orders per year, and the optimal time between orders.arrow_forward
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