Question

Thermo Scientific supplies vials to medical labs throughout the country. Thermo Scientific purchases the vials from...

Thermo Scientific supplies vials to medical labs throughout the country. Thermo Scientific purchases the vials from a manufacturer which has a reputation for very high quality in its manufacturing operation.

      Annual demand (weekly demand=1/52 of annual demand)   500 units

      Per unit carrying cost       $20

      Lead time in days              10 days

      Cost of placing an order      $98

1. What is the economic order quantity?

Group of answer choices

70 units

20 units

1,040 units

15 units

2. What are the annual relevant ordering costs, assuming each order was made at an economic-order-quantity amount of 100?

Group of answer choices

$100

$49,000

$2,000

$490

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Homework Answers

Answer #1

Ans:

1.

Economic Order Quantiity : Square Root of 2 * Annual Demand * Per order Cost / per unit carrying cost

= Square root (2*500*98)/20 = Square root of 4,900

Economic Order Quantiity : 70 Units.

So Correct asnwer is Option A.

2.

Annual Relevant ordering cost : Annual Demand / Order Quantity * Cost per Order:

= 500/100 *98 = $490

So Correct asnwer is Option D.

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