Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 4.7, Problem 24P
Summary Introduction
Interpretation: the optimal order quantity
Concept introduction: EOQ is calculated on two costs, ordering costs, i.e. the cost of placing an order or cost of acquiring inventory, and carrying costs or holding costs ,i.e. The cost of keeping the inventory in the firm, like store keeping costs, obsolescence losses, rent of storage facility etc. EOQ gives us the balance between these two costs as these costs are inversely related to each other.
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In the calculation of an optimal policy for an all-units discount schedule, you firstcompute the EOQ values for each of the three order costs, and you obtain: Q(0) =800, Q(1) =875, and Q(2) =925. The all-units discount schedule has breakpointsat 750 and 900. Based on this information only, can you determine what the optimal order quantity is? Explain your answer.
If the following data is known in determining the Quantity Discount with EOQ
- Demand rate = 100.000
- Ordering Cost = 5000
- Holding/Carrying cost = 600
Price Range
LOWER
UPPER
PRICE
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1
1000
1000
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1001
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1501
3000
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3001
3500
700
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3501
3750
650
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3751
4000
600
Based on the data provided, determine the optimal order quantity and total cost for this case!
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1001
1500
900
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1501
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800
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3001
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3501
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A company incurs an ordering cost of $232 each time it places an order, regardless of the order size. The item's cost is $5, and the annual carrying charge for the item is 30%. If the annual demand for this item is 2,880 and the company's order quantity (Q) is 944, calculate its total annualized cost of inventory.
The total annualized inventory costs are $.
Chapter 4 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 4.4 - Prob. 1PCh. 4.4 - Prob. 2PCh. 4.4 - Prob. 3PCh. 4.4 - Prob. 4PCh. 4.4 - Prob. 5PCh. 4.4 - Prob. 6PCh. 4.4 - Prob. 7PCh. 4.4 - Prob. 8PCh. 4.4 - Prob. 9PCh. 4.5 - Prob. 10P
Ch. 4.5 - Prob. 11PCh. 4.5 - Prob. 12PCh. 4.5 - Prob. 13PCh. 4.5 - Prob. 14PCh. 4.5 - Prob. 15PCh. 4.5 - Prob. 16PCh. 4.6 - Prob. 17PCh. 4.6 - Prob. 18PCh. 4.6 - Prob. 19PCh. 4.6 - Prob. 20PCh. 4.7 - Prob. 21PCh. 4.7 - Prob. 22PCh. 4.7 - Prob. 23PCh. 4.7 - Prob. 24PCh. 4.7 - Prob. 25PCh. 4.8 - Prob. 26PCh. 4.8 - Prob. 27PCh. 4.8 - Prob. 28PCh. 4.9 - Prob. 29PCh. 4.9 - Prob. 30PCh. 4 - Prob. 31APCh. 4 - Prob. 32APCh. 4 - Prob. 33APCh. 4 - Prob. 34APCh. 4 - Prob. 35APCh. 4 - Prob. 36APCh. 4 - Prob. 37APCh. 4 - Prob. 38APCh. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Prob. 45AP
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