What is the average cost per year under the optimal policy

Assignment Help Operation Management

Reference no: EM13957452

Each year the Smalltown branch of a furniture store sells 20,000 dining room tables. The local store orders tables from the company warehouse providing stock for many local branches and the cost of doing this is $15 per table plus a fixed cost of $100 per order. Assume that the lead time is zero. The store’s manager believes that the demand for tables can be backlogged and that the cost of being short one table for one year is $25. The annual holding cost for inventory is 30¢ per dollar value of inventory.

(a) What is the optimal order quantity?

(b) If the store manager orders the order quantity found in part (a), what is the maximum shortage that will occur?

(d) What is the average cost per year under the optimal policy?

Reference no: EM13957452

Questions Cloud

What does the reorder point represent : Stacey manages an accountancy firm in NYC and her staff drink a lot of coffee; the office use 5 kilograms of coffee grounds each day. Her office manager buys coffee from an organic supplier in Brooklyn who charge $7.50 per kilogram of coffee and she ..

Primary activity as described in value chain : Which of the following is NOT an example of a primary activity as described in Porter's value chain?

Description of the potential customers for their product : Albert and Tania produce and sell vanilla, chocolate, lemon, peppermint, and strawberry flavor extracts for baking. They are debating over a description of the potential customers for their product. Albert and Tania are trying to define:

The marketing concept assumes : The marketing concept assumes

What is the average cost per year under the optimal policy : Each year the Smalltown branch of a furniture store sells 20,000 dining room tables. The local store orders tables from the company warehouse providing stock for many local branches and the cost of doing this is $15 per table plus a fixed cost of $10..

Expanding production of calculators to drive down the cost : Texas Instruments, one of the first producers of handheld calculators, put a great deal of effort into expanding production of calculators to drive down the cost and thus, expand the market. This is most indicative of the _____ concept.

How the risk management goals : You are the Chief Risk Officer (CRO) for a small community bank located in a town of about 100,000 people. The institution has one building, which is the bank itself. The bank has a two-lane drive-thru, as well as a walk-up automated teller machine. ..

Marketer seeks to retain customers long-term preference : If a marketer seeks to retain customers' long-term preference and business through a win-win business style, the marketer is engaged in _____ marketing.

Focusing on the performance of individual brands or models : What are the pros and cons of a retailer’s using category management as opposed to focusing on the performance of individual brands or models?

User Account

All Pages