Question: Please write clearly or use the computer to type the answer so that I can see it clearly, thank you!!! The Hospital Authority Supporting Services

Please write clearly or use the computer to type the answer so that I can see it clearly, thank you!!!

The Hospital Authority Supporting Services Center provides in-house laundry services to HA hospitals in Hong Kong. The Center purchases two laundry products including detergent and softener from a supplier that manufactures the products in Thailand. The price of each product is $400 per pack, and that is the purchase cost per unit for the Center. The annual demand for detergent and softener is 40,000 and 20,000 packs, respectively. A fixed cost of $180, which is common to detergent and softener, is incurred each time an order is placed. And the product-specific ordering cost for detergent and softener is $70 and $125 per order, respectively. Detergent and softener have the same holding cost per pack per year, which is 5% of the purchase cost per pack. The assumptions of Economic Order Quantity (EOQ) model are satisfied. Note that the fixed cost per order includes both common and product-specific ordering costs, which are considered in the calculation of EOQ. Show the units and steps of calculation. To encourage the Center to purchase more detergent per order, the supplier now offers an all-unit quantity discount. If the purchase lot size is 2,000 packs or more, a 2% discount of the price per pack is offered. The holding cost per pack per year for detergent is 5% of the purchase cost per pack. Detergent will not be purchased together with softener in a lot in this case.

(a1) If the Center orders detergent independently and does not want the discount offer, determine the EOQ based on the regular price, the order quantity and the total annual cost (i.e., the sum of annual purchase, ordering and holding costs) for purchasing detergent.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!