Question: A local hardware shop is open 2 0 0 days a year and sells 2 0 units of one cordless drill every day. Each drill
A local hardware shop is open days a year and sells units of one cordless drill every day. Each drill costs $ with an annual holding cost of of the purchase cost. It costs the shop $ to place an order, and it always takes days to receive an order.
Please note computational steps are optional for possible partial credit.
a To minimize the total annual costs, how many drills should the shop order each time rounding to the nearest integer if necessary
Answer:
b What is the appropriate reorder point rounding to the nearest integer if necessary
Answer:
c If the annual holding cost of one unit of drill drops to of the purchase price, while everything else remains the same, the new economic order quantity will become fill in percentage, eg of the original optimal order quantity.
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