Secure preferred pricing on several products

Assignment Help Operation Management

Reference no: EM132133702

R = annual demand = $35,500

A = Order Cost = $90

V = product cost = $100

W = inventory c/cost = 14%

EOQ= 676

All questions based on these ^

1. The XYZ Co. has negotiated with their vendor and has been able to secure preferred pricing on several products they purchase from them, including this product. The negotiation will see an initial 12% price decrease. Additionally, the XYZ, Co. has updated their Enterprise Resource Planning system and because of this they has been able to reduce their order costs $75/order.

What is the new EOQ?

2. First off in Scenario 5 the negotiated preferred pricing that the XYZ Co. was able to secure is now in it's 2nd year and the price decrease for Year 2 is 7% of the original product purchase cost. The order cost savings that XYZ Co. obtained due to system improvements have held steady at $75/order. Annual demand on the product has changed. However, the annual demand number is not given. Instead you are told that lead time equals 4 days and the ROP equals 320. Given this data, calculate annual demand. The XYZ Co. works every day except Sundays throughout the year.

What is the new EOQ?

Reference no: EM132133702

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