HW$4-$Ch$6$a$-$ The Economic Order Quantity Model $($EOQ$)$

$1.$ Wing Computer Corporation of Xiamen, China, uses $15,000$ keyboards each year in the production of

computer terminals for major computer manufacturers headquartered in Taiwan. Order cost for the keyboards is

$50$ renminbi, and the holding cost for one keyboard is $1\mathrm{.}5$ renminbi per unit per year.

If Wing orders $1250$ per month, what will be the total annual cost?

a$.1100$ to $1200$

b$.1300$ to $1400$

c$.1500$ to $1600$

d$.1700$ to $1800$

$2.$ MamaMia's Pizza purchases its pizza delivery boxes from a printing supplier. MamaMia's delivers on

average $300$ pizzas each month $($assume deterministic demand$).$ Boxes cost $30$ cents each, and each order costs

$$20$ to process. Because of limited storage space, the manager wants to charge inventory holding at $40$ percent

of the cost. The lead time is $7$ days, and the restaurant is open $360$ days per year, assuming $30$ days per month.

Determine the economic order quantity.

a$.1000$ to $1100$

b$.1200$ to $1300$

c$.1400$ to $1500$

d$.1600$ to $1700$

$3.$ Crew Soccer Shoes Company is considering a change in its current inventory control system for soccer shoes.

The information regarding the shoes is as follows:

Average demand $=250$ pairs$/$week

Lead time $=2$ weeks

Order cost $=$ $$60/$order

Unit cost $=$ $$30$

Carrying charge rate $=0\mathrm{.}30$

Number of weeks per year $=52$

The company decides to use a fixed$-$order$-$quantity system $($EOQ$).$ What is the EOQ? What is the reorder point?

a$.380$ to $400$; $480$ to $510$

b$.380$ to $400$; $510$ to $530$

c$.400$ to $420$; $480$ to $510$

d$.400$ to $420$; $510$ to $530$

Please make sure that you know how to calculate the questions in backward. For example if EOQ and other

information are given without ordering cost, can you find the ordering cost?

Another example: if EOQ and other information are given without holding cost, can you find the holding cost?