Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand =...
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Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand = 31 units per day Average lead time = 45 days Item unit cost = $65 for orders of less than 350 units Item unit cost = $63 for orders of 350 units or more Ordering cost $40 Inventory carrying cost = 20% The business year is 250 days Assume there is no uncertainty at all about the demand or the lead time. a. Calculate EOQ if unit cost is $65 and $63. (Note: These EOQs do not need to be feasible in their price range.) (Round up your answers to the next whole number.) Unit cost at $65 Unit cost at $63 EOQ units units b. Calculate annual ordering costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.) Unit cost at $65 Unit cost at $63 Annual Ordering Cost c. Calculate annual inventory carrying costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.) Unit cost at $65 Unit cost at $63 Annual Inventory Carrying Cost d. Calculate annual product costs for each alternative? (Enter your answer as a whole number.) Annual Product Cost Unit cost at $65 Unit cost at $63 e. Using your rounded answers from Parts b, c and d, what will be the total cost for each alternative? (Round your answers to 2 decimal places.) Total Cost Unit cost at $65 Unit cost at $63 Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand = 31 units per day Average lead time = 45 days Item unit cost = $65 for orders of less than 350 units Item unit cost = $63 for orders of 350 units or more Ordering cost $40 Inventory carrying cost = 20% The business year is 250 days Assume there is no uncertainty at all about the demand or the lead time. a. Calculate EOQ if unit cost is $65 and $63. (Note: These EOQs do not need to be feasible in their price range.) (Round up your answers to the next whole number.) Unit cost at $65 Unit cost at $63 EOQ units units b. Calculate annual ordering costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.) Unit cost at $65 Unit cost at $63 Annual Ordering Cost c. Calculate annual inventory carrying costs for each alternative? (For the first value, use your rounded EOQ from Part a. For the second value, use the lowest feasible order quantity needed to qualify for that price level. Round your answers to 2 decimal places.) Unit cost at $65 Unit cost at $63 Annual Inventory Carrying Cost d. Calculate annual product costs for each alternative? (Enter your answer as a whole number.) Annual Product Cost Unit cost at $65 Unit cost at $63 e. Using your rounded answers from Parts b, c and d, what will be the total cost for each alternative? (Round your answers to 2 decimal places.) Total Cost Unit cost at $65 Unit cost at $63
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a To calculate the Economic Order Quantity EOQ we can use the formula EOQ 2 Average Demand Ordering ... View the full answer
Related Book For
Managing Operations Across the Supply Chain
ISBN: 978-0078024030
2nd edition
Authors: Morgan Swink, Steven Melnyk, Bixby Cooper, Janet Hartley
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