What would be the optimal economic order quantity

Assignment Help Operation Management

Reference no: EM132089684

1. Consider a manufacturer of automobile dashboard that uses a certain hinge, which costs $8.50 per hinge. The forecast is for 1,500,000 annually, spread evenly across the year. The annual holding cost rate used is 35% and the ordering cost is estimated to be $480. The lead time from order to receipt is 5 weeks.

a. If orders were placed using a fixed order quantity model, calculate the optimal economic order quantity (EOQ). If this EOQ is implemented, about how often (in days) will orders be placed? About how many orders will be placed in a year?

b. If the ordering cost is reduced to $120 (from $480), what would be the optimal economic order quantity, the number of orders per year, and the length of time between orders (in days)?

c. Assume that quantity discounts were available as follows: $8.25 per unit if more than 20,000 hinges are ordered, $8.00per unit if more than 40,000 hinges are ordered, and $7.75 per unit if more than 60,000 hinges are ordered. Calculate the optimal order quantity (assume the ordering cost is $480).

Reference no: EM132089684

Questions Cloud

Do defendants internet activities constitute contacts : Do defendants internet activities constitute contacts for the purpose of personal jurisdiction in any other lawsuits filed in Illinois?

What was trigger event that led shel skinner to adopt agile : Blue Cloud Gets Agile. What was the trigger event that led Shel Skinner to adopt Agile?

The role that management still holds in business : The main comparison lies in the role that management still holds in business.

Ensuring communication-continuity within its growing system : Vila Health plans to use existing data to develop a strategy for improving and ensuring communication and continuity within its growing system.

What would be the optimal economic order quantity : What would be the optimal economic order quantity, the number of orders per year, and the length of time between orders (in days)?

Strategy for managing stakeholder expectations : The Stakeholder Register provides a strategy for managing stakeholder expectations.

Corporation terminate sam without any notice or hearing : Can Colossal Corporation terminate Sam without any notice or a hearing? Why or why not? This question relates to employment-at-will.

Describe the process of classical method : Describe the process of classical method. Describe the process of Lean method (it includes six sigma).

Describe how the specific promotional strategy : Describe how the specific Promotional Strategy you are recommending complements all of your strategic recommendations

User Account

All Pages