Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
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- Consider the basic EOQ model. Annual holding cost (AHC) is $2,400. Optimal cycle time (time between orders, T*) is 3 months. Find ordering cost per order (S). $400 per order $600 per order $2,400 per order Cannot be calculated $9,600 per orderarrow_forwardDaily demand for a product is 138 units, with a standard deviation of 36 units. The review period is 10 days and the lead time is 6 days. At the time of review, 58 units are in stock. If 98% service probability is desired (corresponding z = 2.05), how many units should be ordered? (please rounded to integer)arrow_forwardAverage daily demand (d) 80 units Standard deviation of daily demand (σd) 24 units Average lead time (LT) 6 days Standard deviation of lead time (σLT) 2 days Service level 91% 1. What is the required safety stock at a 91 percent service level? _______ units 2. What is the reorder point? _______ unitsarrow_forward
- Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $30. The cost of holding one unit of inventory for one year is $15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Compute the economic order quantity. Economic order quantity = 1600 Compute the ordering, carrying, and total costs for the EOQ. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?arrow_forwardThe electrolyte drink for our beloved NMSU soccer team average normally distributed demand of 5 units and a standard deviation of 1 unit. Lead time for replenishment is fixed at four days. (a) What is the reorder point if there is no safety stock? (b) What is the reorder point if the service level is 80 percent? (c) How much more safety stock is required if the service level is raised from 80 percent to 90 percent?arrow_forwardNeed in Detail (No AI)arrow_forward
- When an firm put aside some extra inventory that serves as an insurance against flucation in demand is called Wastage Inventory O Minimum Level Safety Stock EOQarrow_forwardIn the basic EOQ model, if annual demand doubles, the EOQ will O a. increase by about 41.42 percent O b. decrease by 48.42% O c. double O d. None of these O e. be about 70.7 percent of its previous amountarrow_forwardUsing relevant eoq calculations Which order size would you recommend that the hospital use?arrow_forward
- K William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D 19,400 units/year Ordering cost S $27/order Holding cost H $5/unit/year a) The EOQ for the workbooks is 458 (round your response to the nearest whole number) b) What are the annual holding costs for the workbooks? $ (round your response to the nearest whole number).arrow_forward← William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D 19,400 units/year Ordering cost S $27/order Holding cost H $5/unit/year a) The EOQ for the workbooks is 458 (round your response to the nearest whole number). b) What are the annual holding costs for the workbooks? $ 1145 (round your response to the nearest whole number). c) What are the annual ordering costs? $ (round your response to the nearest whole number).arrow_forwardJoe Henry's machine shop uses 2,460 brackets during the course of a year. These brackets are purchased from a supplier 90 miles away. The following information is known about the brackets: Annual demand 2,460 Holding cost per bracket per year $ 1.65 Order cost per order $20.00 Lead time 22 days Working days per year 250 a) What is the EOQ? b) What is the average inventory if the EOQ is used? What would be the annual inventory holding cost? c) Given the EOQ, how many orders would be made each year? What would be the annual order cost? d) Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? e) What is the time between orders? f) What is the reorder point (ROP)?arrow_forward
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