• Astromed Cable is concerned about its stocks of copper cable. The demand for this is 10,000 metres a week, with a cost of $5 a metre. Each order costs $ 450 for administration and $550 for delivery and has a lead time of 8 weeks. Holding costs are about 25 per cent of the value held a year, and any shortages would disrupt production and give very high costs. 
• Required:
• a. What is the best inventory policy for the cable? How does this compare with the current policy of placing a regular order every week?  Draw the TR and TC graph for EOQ and weekly order.
• b. Draw the inventory geometry for the EOQ case in point (a) 
• c. How would this analysis differ if the company wanted to maximize profit rather than minimize costs? What is the gross profit if the company sells cable for $10 a metre? 
• d. Supposed that the copper cable is ordered in a roll 0f 50 metres each, how many rolls should the company order? If the supplier offers the all-units discount price of $4 a metre with a minimum order of 640 rolls, do the company accept this offer?

Answer rating: 100% (QA)

Date Page Answer A Demand d 10000 per week Annual Demand P 10000 52 ... View the full answer