Calculate economic order quantity and time btwn production

Assignment Help Econometrics

Reference no: EM13204174

A company has an annual requirement for 150,000 parts, which cost $125 each. The parts require processing having a $4,000 setup cost. Each part occupies 0.5 sqft of floor space in the factory. Floor space has a total cost of $12.50 per square foot. The company uses 20% MARR (Minimal accepted rate of return).

a) Calculate the economic order quantity and the time between production (setup) runs.

b) Plot the inventory level vs time for a reasonable number of full inventory cycles.

c) If the company decides to meet its annual volume requirement of 150,000 by placing an order every 2 months, what would be the impact on the combined setup and storage costs?

Reference no: EM13204174

Questions Cloud

How did keynes challenge the classical conclusion : How did Keynes challenge the classical conclusion about income and employment, especially as it referred to the three foundations of classical theory; Say's law, the abstinence theory of interest, and wage-price flexibility

If trade begins who exports and who imports : Think about Trade. Country A takes 20 minutes to make a car, and 15 minutes to make a computer. Country B takes 30 minutes to make a car, and 20 minutes to make a computer. Total work time is 1 hour. If trade begins who exports and who imports

Calculate your arithmetic and geometric mean returns : Calculate your dollar and percentage return on the investment in Loewen for each year and calculate your dollar return on the investment - calculate your arithmetic and geometric mean returns for this period. Why are the arithmetic and geometric mea..

Predict the equilibrium number of book stores : The city of Bookburg initially allows only one book store, which sells books at a price of $20 and an average cost of $11. Suppose the city eliminates its restrictions on book stores, allowing additional stores to enter the market. According to an..

Calculate economic order quantity and time btwn production : A company has an annual requirement for 150,000 parts, which cost $125 each. The parts require processing having a $4,000 setup cost. Each part occupies 0.5 sqft of floor space in the factory. Floor space has a total cost of $12.50 per square foot..

What rate of return must you earn on the investments : How much must the annual investments be to create the $2,200,000 fund by the end of 42 years and what rate of return must you earn on the investments?

How many tons of steel do the residents of indiana prefer : East Chicago is a major production center of steel in the United States. In the process of producing steel, the firms in this are emit pollution both into the air and into the water which adversely affect Indiana residents. The EPA has determined ..

Determine how much should be invested at a rate : A civil engineering consulting firm is evaluating its cash flow requirements for the next 7 years. The company expects to replace computer equipment and furniture at various times over the 7-year planning period. Specifically, the company expects ..

Which is not a deficiency of the multiplier concept : Within your supplemental readings for this semester, there are several discussions of the Keynesian multiplier. In the minds of the critics that you read, which is not a deficiency of the multiplier concept

User Account

All Pages