Production rate-what is the optimal order quantity

Assignment Help Operation Management

Reference no: EM131041310

Suppose that MW Inc. has a production rate of 450,000 units per year, and a daily demand of 1500 units on each working day (assume 250 working days per year). They estimate that is costs $140 to setup for each production run, and the holding cost percentage is 20% of the unit cost. The product is sold for $50 per unit, and the unit cost is $30.

a. What is the optimal order quantity?

b. How many units does the warehouse need to be able to hold?

Reference no: EM131041310

Questions Cloud

Find the beta coefficient of the stock : Find the Beta coefficient of the stock. a. See handouts for methods of calculating Beta. b. Compare to the published Beta c. Reasons for difference, if any

What is the firm''s cost of equity : A common stock issue is currently selling for $31 per share. You expect the next dividend to be $1.40 per share. If the firm has a dividend growth rate of 5% that is expected to remain constant indefinitely, what is the firm's cost of equity?

Discuss what aspects you might adopt in your venture : Within an industry or market segment similar to your potential venture, identify a pioneering firm that successfully built long-term success around a new product or service in a new market.

What is the value of a share of pale hose : Suppose Pale Hose, Inc. has just paid a dividend of $1.60 per share. Sales and profits for Pale Hose are expected to grow at a rate of 7% per year. Its dividend is expected to grow by the same amount. If the required return is 12%, what is the val..

Production rate-what is the optimal order quantity : Suppose that MW Inc. has a production rate of 450,000 units per year, and a daily demand of 1500 units on each working day (assume 250 working days per year). They estimate that is costs $140 to setup for each production run, and the holding cost per..

Determining the interest rate : What is the present value of $500 payments received at the beginning of each year for the next 10 years? Assume an interest rate of 9% compounded monthly.

Cultural values of the organisation for which you work : "Imagine yourself in a situation where you are a manager in a government establishment. Do you think your choice would be most affected by your individual moral development or by the cultural values of the organisation for which you work? Explain"

How employment laws and public policy affect recruitment : Part of the responsibilities of HR Management is the design and implementation of good performance appraisal systems. You work as a full-time HR professional for SAP Software & Solutions in Newtown Square, PA. As with most companies, SAP does pe..

What is the aftertax cost of debt : A bond issue sells for $950. The coupon rate is 8%, the bond matures in 18 years, and interest is paid semi-annually. The tax rate is 35%. What is the aftertax cost of debt?

User Account

All Pages