Question

#10 What will be the time between orders (in working days) if the Cowboy Saddle Company ordered 200 units each time, Use the data of Question 7.

A. 2
B. 5
C. 10
D. 20
E. 25

Question 7 is below:

The Cowboy Saddle Company manufactures plastic saddles that are used in the assembly process of their Mr. Ed doll. The firm desires to control inventory levels so as to minimize the sum of holding and order costs. Annual demand is 5000 units, and the item costs $10 per unit. It costs the firm $20 to place an order. The firm estimates its yearly inventory carrying costs at 20%. The lead-time for the product is 2 weeks. Assume that there are 50 weeks in the work year and 5 working days per week. The EOQ is:

A. 32
B. 45
C. 145
D. 224
E. 316

Answer 1

Answer 10 is 10 working days

Annual demand = 5,000 units
Order size = 200 units

Number of orders = Annual demand / Order size
Number of orders = 5,000 / 200
Number of orders = 25 orders

Number of weeks = 50
Number of working days per week = 5

Number of working days = Number of weeks * Number of working days per week
Number of working days = 50 * 5
Number of working days = 250

Time between orders = Number of working days / Number of orders
Time between orders = 250 / 25
Time between orders = 10 days