Calculate optimal number of orders each year

Reference no: EM13116583

Washington Metro Bus Inc. operates a fleet of 400 buses. The fleet includes buses used for public transit as well as school buses. Buses used in public transit average close to 400 miles per day, seven days a week. School buses also amass considerable mileage, though not nearly as much as public transit bus. Metro Bus is interested in setting up inventory policy for bus tires that minimizes the sum of annual ordering and carrying cost. All buses use the same type of tires and the annual requirement of tires are 5000. Ordering cost per order is $125, and the cost for carrying a tire annually in inventory is $20. For practically purposes, the lead time is zero, as the supplier agrees they will deliver on the day the order is placed. Note that the basic unit of measurement for a period is one year in this case.

Problem:

1. What is the Economic Order Quantity (EOQ)?
2. Compute the optimal number of orders each year?
3. What is the length of the inventory cycle?

Reference no: EM13116583

Questions Cloud

Define fixed exchange rate-flexible exchange rate : What is a fixed exchange rate and what is a flexible exchange rate? China currently has a fixed exchange rate pegged to the US Dollar. How would a flexible exchange rate help China's global business?

Which type of diet do you think will allow : Some animals have a very broad, varied diet, while others have very specialized diets. Which type of diet do you think will allow an animal to adapt to climate change the easiest? Explain your answer.

Speculating with currency futures : Speculating with Currency Futures: Assume that a March futures contract on the Mexican Peso was available in January for $.09 per unit. Also assume that forward contracts were available for the same settlement date at a price of $0.092 per peso.

How might species change their distributions : How might species change their distributions as global temperatures continue to increase? What do you think will happen to species which live on the tops of mountains?

Calculate optimal number of orders each year : The supplier agrees they will deliver on the day the order is placed. Note that the basic unit of measurement for a period is one year in this case.

Advantages and disadvantages direct-indirect foreign : What are some advantages and disadvantages of the different types of direct and indirect foreign investments? Does direct or indirect foreign investment always lead to risk reduction?

Explain what effect this hard work by your muscle cells : Based on this equation, explain what effect this hard work by your muscle cells will have on the pH of the blood.

What will be the ph of the new solution : A 1 L solution of 1.5 M acetic acid and 1.5 M sodium acetate has a ph of 4.74. 10 ml of 0.1 M NaOH were added to the solution followed by the addition of 50 ml of 0.02 M HCl.

Money market hedge : Describe the steps to take for a money market hedge. You need to show clearly the amounts that are related to the actions to take.

User Account

All Pages