(4) Thompson Tooling uses a total of 150,000 bushings a year in its production. Thompson currently...
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(4) Thompson Tooling uses a total of 150,000 bushings a year in its production. Thompson currently orders 40,000 units from its supplier each time he makes a purchase. It costs $40 to place an order, regardless of the order quantity, and the estimated holding cost to carry one unit for a year is 20% of the unit cost, which is $0.15. Thompson wants to know how many units he should so that the total ordering and inventory holding cost will be minimized. If, indeed, he orders according to the best quantity identified, how much money could he save annually? (4) Thompson Tooling uses a total of 150,000 bushings a year in its production. Thompson currently orders 40,000 units from its supplier each time he makes a purchase. It costs $40 to place an order, regardless of the order quantity, and the estimated holding cost to carry one unit for a year is 20% of the unit cost, which is $0.15. Thompson wants to know how many units he should so that the total ordering and inventory holding cost will be minimized. If, indeed, he orders according to the best quantity identified, how much money could he save annually?
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