Solution-Determine optimal size of orders of hexnuts and

Determine optimal size of orders of hexnuts and molly screws

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Reference no: EM132827008

A local machine shop buys hex nuts and molly screws from the same supplier. The hex nuts cost 15 cents each and the molly screws cost 38 cents each. A setup cost of $I00 is assumed for all orders. This includes thecost of tracking and receiving the orders. Holding costs are based on a 25 percent annual interest rate. The shop uses an average of 20,000 hex nuts and 14,000 molly screws annually.

a) Determine the optimal size of the orders of hexnuts and molly screws, and the optimal time between placement of orders of these two items.If both items are ordered and received simultaneously, the setup cost of $100 applies to the combined order. Compare the average annual cost of holding and setup if these items are ordered separately; if they are both ordered when the hex nuts would normally be ordered; and if they are both ordered when the molly screws would normally be ordered.

Calculate the error made (percentage) in calculating the relevant costs:

Reference no: EM132827008

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Determine optimal size of orders of hexnuts and molly screws

Reference no: EM132827008

Reference no: EM132827008

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