Question

Pam runs a​ mail-order business for gym equipment. Annual demand for TricoFlexers is 24,000. The annual...

Pam runs a​ mail-order business for gym equipment. Annual demand for TricoFlexers is 24,000.

The annual holding cost per unit is

​$3.25, and the cost to place an order is ​$67

a. What is the economic order​ quantity?

The EOQ is 995.

​(Enter your response rounded to the nearest whole​ number.)

b. Suppose demand for TricoFlexers​ doubles, to 48,000.

The EOQ for the new value of demand is

nothing.

​(Enter your response rounded to the nearest whole​ number.)

c. The manufacturer of TricoFlexers has agreed to offer Pam a price discount of ​$44 per unit $63 rather than $67 if she buys 1,000. Assuming that annual demand is still 24,000​,how many units should Pam order at a​ time?

Pam should order _____ units at a time. (Enter your response rounded to the nearest whole number)

Homework Answers

Answer #1

Given:

  • Demand (D) =24000 units/year
  • Setup Cost (S) = $ 67
  • Holding Cost (H)= $3.25 per unit per year

a) EOQ (Q) = ((2DS)/H)^0.5 = ((2*24000*67)/3.25)^0.5 = 994.75 = 995

b) If new Demand = 48000

EOQ (Q) = ((2DS)/H)^0.5 = ((2*48000*67)/3.25)^0.5 = 1406.79 = 1407

The EOQ of the new order increases as demand increases

       c) If Setup Cost (S) = $ 63

EOQ (Q) = ((2DS)/H)^0.5 = ((2*24000*63)/3.25)^0.5 = 964.60 = 965

There will be a slight decrease In the EOQ value

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If D​ = 8 500 per​ month, S​ = ​$47 per​ order, and H​ = ​$2.00...
If D​ = 8 500 per​ month, S​ = ​$47 per​ order, and H​ = ​$2.00 per unit per​ month, ​a) What is the economic order​ quantity? The EOQ is   units ​(round your response to the nearest whole​ number). ​b) How does your answer change if the holding cost​ doubles? The EOQ is   units ​(round your response to the nearest whole​ number). ​c) What if the holding cost drops in​ half? The EOQ is    units ​(round your response to the...
William? Beville's computer training? school, in? Richmond, stocks workbooks with the following? characteristics: Demand D      19,...
William? Beville's computer training? school, in? Richmond, stocks workbooks with the following? characteristics: Demand D      19, 200 units/year Ordering cost S     ?$24?/order Holding cost H ?         $4?/unit/year ? ? ?a) The EOQ for the workbooks is ?(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). ?c) What are the annual ordering? costs? ?(round your response to the nearest whole? number
The Queens Box Company experiences a constant demand of 48,000 boxes per year to operate its...
The Queens Box Company experiences a constant demand of 48,000 boxes per year to operate its business. The unit cost is .30 (cents). Placing an order costs $20 and annual carrying costs are $2/unit. The company operates 250 days per year and maintains a safety stock of 576 boxes. The lead time for an order of boxes is 4 business days. The EOQ (rounded to the nearest whole number) is: a. 576 units C. 3098 units b. 490 units d....
Need It ASAP!!!!! Wang Distributors has an annual demand for an airport metal detector of 1...
Need It ASAP!!!!! Wang Distributors has an annual demand for an airport metal detector of 1 comma 400 units. The cost of a typical detector to Wang is ​$400. Carrying cost is estimated to be 18​% of the unit​ cost, and the ordering cost is ​$27 per order. If Ping​ Wang, the​ owner, orders in quantities of 300 or​ more, he can get a 7​% discount on the cost of the detectors. Should Wang take the quantity​ discount? What is...
1.3       Spares for you sells spares for the motor and taxi industry. The company runs a...
1.3       Spares for you sells spares for the motor and taxi industry. The company runs a mail-order business for taxi headlights. Annual demand for the headlights is 8 000 units. The annual holding cost per unit is R300 and the cost to place an order is R80. Calculate the EOQ.       1.4       Study the information below and answer the questions that follow: Normal usage or average requirement 800 units per day Maximum usage 1 000 units per day Minimum...
?Sam's Cat Hotel operates 49 weeks per? year, 5 days per week. It purchases kitty litter...
?Sam's Cat Hotel operates 49 weeks per? year, 5 days per week. It purchases kitty litter for $ 6.50per bag. The following information is available about these? bags: Demand= 75 bags/week Order cost? = ?$65?/order Annual holding cost? = 25 percent of cost Desired cycle-service level=92 percent Lead time? = 1 ?week(s) ?(5 working? days) Standard deviation of weekly demand? = 10 bags Current on-hand inventory is 250 ?bags, with no open orders or backorders. Suppose that? Sam's Cat Hotel...
McCartney Company produces a number of products and provides the following information: Annual demand for Product...
McCartney Company produces a number of products and provides the following information: Annual demand for Product C 20,000 Cost of setting up to make Product C $45 Cost of carrying one unit of Product C in inventory $5 Currently, McCartney produces 1,000 units of Product C per production run. Inventory-related cost for Product C under the current inventory policy is a.$900. b.$2,500. c.$3,400. d.$45,000. e.$100,000. The economic order quantity (EOQ) for Product C is a.500. b.600. c.700. d.800. What is...
​Dave's Sporting Goods sells Mountain Mouse​ freeze-dried meals.​ Dave's uses a continuous review system to manage...
​Dave's Sporting Goods sells Mountain Mouse​ freeze-dried meals.​ Dave's uses a continuous review system to manage meal inventories. Suppose Mountain Mouse offers the following volume discounts to its​ customers: 1-600 meals: ​$9.50 per meal 601 or more​ meals: $8.50 per meal Annual demand is 1,600 ​meals, and the cost to place an order is ​$22 Suppose the holding cost is ​$4.25 per meal per year. How many meals should​ Dave's order at a​time? ​Dave's Sporting Goods should order meals at...
The INDY Industrial Supply Company has finished a highly-sophisticated project where they separately determined order setup...
The INDY Industrial Supply Company has finished a highly-sophisticated project where they separately determined order setup (S) costs for each of their main suppliers, based on the specific ordering process for that supplier. They have determined that the ACME Supplier, from which they order six different SKUs, the setup cost for an order (which has been highly automated) to be $32.50 per order, with an additional cost of $3.25 for each line on the order. Annual demand data and cost...
Demand for carpet at a carpet wholesaler stays constant at 10,000 sq. ft. per month. The...
Demand for carpet at a carpet wholesaler stays constant at 10,000 sq. ft. per month. The wholesaler incurs a fixed transportation cost of $100 each time an order is placed and delivered. The carpet costs $3 per sq. ft. and the wholesaler has an annual holding cost rate (per sq. ft.) that is 20% of the unit purchase cost. What should the optimal order size (or EOQ) be? Note that the carpet can be ordered in any size, so there...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT