A produce distributor uses 3,200 packing crates a month, and each crate is purchased at a...

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A produce distributor uses 3,200 packing crates a month, and each crate is purchased at a cost of $12. The manager has assigned an annual carrying cost of 30 percent of the purchase price per crate. Ordering cost is $270. Currently the manager orders once a month. a) What is the Economic Order Quantity (EOQ) for this product? (4 pts) b) How much could the firm save annually in total holding and ordering costs by ordering at the EOQ level? (8 pts) (Show the computations for the total holding and ordering costs in detail) Problem 2) (14 points) A manager has just received a revised price schedule for its main product from a vendor as seen in the table below. What order quantity should the manager use to minimize total costs? Annual demand is 45,000 units, ordering cost is $100, and annual carrying cost is $4 per unit (regardless of the price per unit). Quantity 1 to 999 1,000 to 1,999 2,000 to 2,999 3000 or more Unit Price $12.75 $12.50 $12.35 $12.25 A produce distributor uses 3,200 packing crates a month, and each crate is purchased at a cost of $12. The manager has assigned an annual carrying cost of 30 percent of the purchase price per crate. Ordering cost is $270. Currently the manager orders once a month. a) What is the Economic Order Quantity (EOQ) for this product? (4 pts) b) How much could the firm save annually in total holding and ordering costs by ordering at the EOQ level? (8 pts) (Show the computations for the total holding and ordering costs in detail) Problem 2) (14 points) A manager has just received a revised price schedule for its main product from a vendor as seen in the table below. What order quantity should the manager use to minimize total costs? Annual demand is 45,000 units, ordering cost is $100, and annual carrying cost is $4 per unit (regardless of the price per unit). Quantity 1 to 999 1,000 to 1,999 2,000 to 2,999 3000 or more Unit Price $12.75 $12.50 $12.35 $12.25

Answer rating: 100% (QA)

Problem 1 a To calculate the Economic Order Quantity EOQ we can use the EOQ formula EOQ 2 D S H Where D Annual demand 3200 crates per month 12 months 38400 crates per year S Ordering cost per order 27... View the full answer