Determine optimal quantity of coal to receive in each order

Assignment Help Operation Management

Reference no: EM13843409

The purchasing manager for the Pacific Steel Company must determine a policy for ordering coal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the firm operates 360 days per year. The purchasing manager has determined that the ordering cost is $80 per order, and the cost of holding coal is 20% of the average dollar value of inventory held. The purchasing manager has negotiated a contract to obtain the coal for $12 per ton for the coming year.

a. Determine the optimal quantity of coal to receive in each order.

b. Determine the total inventory-related costs associated with the optimal ordering policy (do not include the cost of the coal).

c. If five days' lead time is required to receive an order of coal, how much coal should be on hand when an order is placed?

Show solutions

Reference no: EM13843409

Questions Cloud

Design an incident response plan : Using the format provided in the text, design an incident response plan for your home computer. Include actions to be taken if each of the following events occurs: What other scenarios do you think are important and need a plan?

Consider the following nested loop construct : Consider the following nested loop construct. Categorize its efficiency in terms of the variable n using big-O notation. Suppose the statements represented by the ellipsis require four main memory accesses (each requiring one microsecond) and two dis..

Formulate a linear program thal maximizes the farmers profit : Formulate a linear program thal maximizes the farmers profit - Write a linear model that detennince the minimum cost generation plan.

Determine the fraction defective in each sample : Determine the fraction defective in each sample. If the true fraction of defective for this process is unknown, what is your estimate of it? What is your estimate of the mean and standard deviation of the sampling distribution of fractions defective ..

Determine optimal quantity of coal to receive in each order : The purchasing manager for the Pacific Steel Company must determine a policy for ordering coal to operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the firm operates 360 days per year. Determine the optimal..

A minivan has two sliding doors : A minivan has two sliding doors. Each door can be opened by either a dashboard switch, its inside handle, or its outside handle. However, the inside handles do not work if a child lock switch is activated. In order for the sliding doors to open, th..

Identifies third party logistics provider : Using the internet identifies a third party logistics (3PL) provider and describes the type of services it offers and the advantages it might provide the outsourcing company.

Use wertheims structure for case analysis : Write a formal case analysis (5-7 pages) of "The Virgin Group in 2012." Use Wertheim's structure for case analysis. Pay particular attention to the choices of corporate strategy when outlining the causes of any problems identified. Identify creative ..

Using powerpoint, word, visio or any other graphical editor : Using Powerpoint, Word, Visio or any other graphical editor that allows you to create shapes and arrows, create a simple flow chart that provides the functionality for this pseudocode: Write "Enter the price in dollars: " Input Price

User Account

All Pages