Assignment 4 Solution
Assignment 4 Solution
4 points
In inventory models, if holding costs are high, then high inventory levels
desired.
Please answer 'True' or 'False'.
False
4 points
4 points
Question 4: EOQ
6 points
If annual demand is 41345 units, the ordering cost is $7 per order and
the holding cost is $5 per unit per year, what is the optimal order quantity
using the fixed-order quantity model? Please round to a whole number.
(2*41345*7/5)^1/2
6 points
Ray's Satellite Emporium wishes to determine the best order size for its
best-selling satellite dish. Ray has estimated the annual demand for this
model at 952 units. His cost to carry one unit is $100 per year per unit,
and he has estimated that each order costs $27 to place. How many should
Ray order each time? Please round to a whole number.
(2*952*27/100)^1/2
Demand for an item is 1000 units per year. Each order placed costs $10.
The annual cost to carry items in inventory is $2 each.
Part a: 3 points
Part b: 5 points
What is the total annual inventory cost (not including purchase cost)?
Q/2*H+D/Q*S=100*2/2+(1000/100)*10=200
Part c: 6 points
Demand for an item is 18199 units per year. Each order placed costs $111.
The annual carrying cost percentage per item in inventory is 18% each.
The variable purchase cost is $2.50 per unit if less than 3000 units will
be ordered, $2.40 from 3000 units upto (but not including 4000 units),
and $2.30 for at least 4000 units. These are all-units discounts.
Part a: 3 points
What is the optimal order quantity Q* for the unit cost of $2.30? Please
round to a whole number.
[2*18199*111/(0.18*2.3)]^1/2=3123.92
Part b: 2 points
Is this quantity realizable/feasible?
Please answer 'Yes' or 'No'.
No
Part c: 5 points
Part d: 3 points
What is the optimal order quantity Q* for the unit cost of $2.40? Please
round to a whole number.
[2*18199*111/(0.18*2.4)]^1/2=3058.147
Part e: 2 points
Part f: 5 points
Part g: 3 points
What is the optimal order quantity Q* for the unit cost of $2.50? Please
round to a whole number.
[2*18199*111/(0.18*2.5)]^1/2=2996.36
Part h: 2 points
Demand for an item is 632 units per year. Each order placed costs $8. The
annual carrying cost percentage per item in inventory is 21% each. The
variable purchase cost is $0.30 per unit if less than 500 units will be
ordered, $0.29 from 500 units upto (but not including 1000 units), and
$0.28 for at least 1000 units. These are incremental discounts.
Part a: 3 points
What is the optimal order quantity Q* for the first price interval (0.30)?
Please round to a whole number.
[2*513*3/(0.20*0.3)]^1/2=401
Part b: 2 points
Part c: 4 points
What is the optimal order quantity Q* for second price interval (0.29)?
Please round to a whole number.
519
Part d: 2 points
Part e: 5 points
What is the optimal order quantity Q* for third price interval (0.28)?
Please round to a whole number.
703
Part f: 2 points
Is this quantity realizable/feasible?
Please answer 'Yes' or 'No'.
No
8 points
A company is planning for its financing needs and uses the basic
fixed-order quantity inventory model. What is the total annual cost (T)
of the inventory given an annual demand of 34455, order setup cost of $64,
a holding cost per unit per year of $8, an order quantity of 380 units,
and a cost per unit of inventory of $185?
=185*34455+34455*64/380+380*8/2=6378457.947