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Ross White’s machine shop uses 2500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 300 working days per year.
1. Develop a total cost model for this system.
2. What is the EOQ for this problem?
3. What is the cycle time?
4. What is the reorder policy?
5. What are the total annual holding and ordering costs associated with your recommended EOQ?
6. What is the total annual cost associated with your recommended EOQ?
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