EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 11, Problem 7PA
Summary Introduction
Interpretation:The total annual cost needs to be calculated when 400 boxes will be ordered.
Concept Introduction: The economic order quantity approach aims to reduce the costs associated with holding, inventory and ordering.
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Students have asked these similar questions
Dream Resorts buys custom - made boxes in bulkand uses them to pack its wine, which it bottles and sells in its on - location Restaurant/ Wine shop. The annual requirement of these boxes is 1200 and each box costs $30. The ordering and carrying costs are $10 per order and 20%, respectively. The supplier from whom Dream Resorts purchases these boxes sells them only in lots of 20, that is, you only purchase quantities in multiples of 20 boxes.
Required:
a) How many boxes should the confectioner order so as to minimise inventory total stocking costs?
b) If the supplier offers 2% discount on the cost of each box when the purchases are in quantities of 300 at a time, should the confectionewr accept this offer?
c) Suppose the supplier has decided that instead of the 2% discount offer, a price reduction of $0.25 will be used for the order quantities as shown in Table Q1:
Table Q1
Order quantity
Cost per box
Less than 100
$30.00
100 to 199
$29.75
200 or more
$29.50
What order…
MamaMia's Pizza purchases its pizza delivery boxes from a printer. MamaMia's delivers an average of 450 pizzas weekly. Boxes cost 75 cents each, and each order costs $3 to process. Because of limited storage space, the manager wants to charge inventory holding at 18 percent of box unit cost. The lead time to obtain boxes from the printer is seven days, and the restaurant is open 360 days per year.
A. The economic order quantity (EOQ) for boxes is approximately:
B. In the MamaMia's Pizza example above, the total annual cost (TAC) associated with the EOQ-based policy is approximately:
Maroons Medical Supplies, Inc. must order masks from its supplier in lots of 1 dozen boxes. Given the information provided below, complete the following table:
Annual demand 26,000 dozen
Cost per order placed P30
Carrying cost 20%
Price per dozen P7.80
Order Size (Dozen)
250
500
1,000
2,000
13,000
26,000
Number of orders
Average inventory
Carrying cost
Order cost
Total cost
1. What is the EOQ?
Please include/fill the table and solve for EOQ.
Thank you so much!
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