Calculate the eoq and total cost

Reference no: EM1370806

1. You need $50,000 cash throughout year. Your time is worth $100 per hour and it takes you a half-hour to get cash from your ATM. Your bank is paying 5% per annum passbook savings.
a. What is the EOQ?
b. What is the total cost at the EOQ?
c. How many times per year will you visit your ATM?

2. Consider the Economic Order Quantity Model. Prove algebraically that

a. , where TC* is the total inventory cost at the EOQ, and

b. , where TC* is the total inventory cost at the EOQ = Q*.

Remark: An algebraic proof involves working with the algebraic symbols, not with specific values of these symbols.

3. A small refrigeration shop stocks up on electric motors from a catalog supplier located in the Midwest. The price of the motors varies depending on the quantity purchased; the price breaks are shown in the table. The refrigeration shop knows it will need around 600 motors for the coming season and that it will cost them about $40 to place an order. Storage cost for the motors is based on i = 30%. In previous years they have bought all 600 at once and they are considering doing this again. What order quantity would you advise and how much can they save using your recommendation instead of their one order per year strategy? Note: The quantity discount applies to ALL units. For example, if you purchase 60 units, you pay $34.00 for all units from the first through the sixtieth for a total of $34 times 60 = $2,040.00.
Quantity Price/unit
1-49 $35.00
50-99 $34.00
100-499 $33.00
500 or more $30.00

4. The Union Street Microbrewery makes a beer, which it bottles and sells in its adjoining restaurant and by the case. It costs $1,000 to set up, brew, and bottle a batch of the beer. The annual cost to store the beer in inventory is based on i = 25% and C = $4.00 per bottle. The annual demand for the beer is 18,000 bottles and the brewery has the capacity to produce 30,000 bottles annually. Use the Uniform Lot Delivery model of page 393.
a. What is the optimal lot size?
b. What is the optimal annual cost?
c. What is the number of production runs a year?

5. Three Chums Fish Company buys fresh salmon daily from the fishermen that ply the deep waters of Puget Sound. Salmon are purchased for $2.50 per pound and sold to the public at $8.50 per pound. The salmon are kept fresh by displaying them on ice but at the end of the day, any unsold fish have a noticeable odor and are sold to a nearby chowder stand for $1 per pound. The past yearâ??s demand for salmon on Saturdays is shown in the table. Based on this information, what should their target service level and stocking point be? What is the significance of the target stocking level? Hint: See Chapter 12, Solved Problem 1, page 298.
Daily Demand (pounds) # Days at This Level
300 3
320 4
340 6
360 8
380 8
400 8
420 6
440 5
460 2

Reference no: EM1370806

Questions Cloud

Find out the power dissipated in the resistor : A 60.0 resistor is connected in parallel with a 116 resistor. This parallel group is connected in series with a 20.0 resistor. The total combination is connected across a 15.0 V battery.

Explain the gaap : Explain The GAAP (Generally Accepted Accounting Principles) do an unacceptable job of accounting for the principal activities of the Information Age companies

What security features given by running special software : What security features could be given without changing mail delivery infrastructure, i.e., by only running special software at source and destination?

Information related to four functions of management : Prepare a piece of writing in which you define the four functions of management (planning, organizing, leading, and controlling). Include an explanation of how each function relates to your own organization.

Calculate the eoq and total cost : You need $50,000 cash throughout year. Your time is worth $100 per hour and it takes you a half-hour to get cash from your ATM. Your bank is paying 5% per annum passbook savings.

Illustrate what three or four countries meet criteria : In searching for global markets to enter, illustrate what are some criteria that Rollerblade should use to select countries to enter and illustrate what three or four countries meet se criteria best and are most likely candidates.

What is the magnification when used as a concave mirror : At which wavelengths (or energies) will you observe lines in infrared absorption (a phonon absorbs a photon) and raman scattering spectra? The temperature is 300 k. raman scattering is excited with a cw Argon laser at 514.5 nm.

Explain how logitech has configured its global operations : Explain how Logitech has configured its global operations including the location of its manufacturing

Advantages and disadvantages to group decision making : What can Learning or work teams do to maximize productivity and what is the value of storming in the group development process?

User Account

All Pages