Problem 1) (12 points) A produce distributor uses 2,560 packing crates a month, and each crate is purchased at a cost of $16. The manager has assigned an annual carrying cost of 25 percent of the purchase price per crate. Ordering costs are $240. 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 12,000 units, ordering cost is $180, and annual carrying cost is $3 per unit (regardless of the price per unit). Quantity Unit Price 1 to 999 $11.50 1,000 to 1,999 $11.35 2,000 to 2,999 $11.25 3000 or more $11.20 Problem 3) (12 points) a) Compute the multifactor productivity measure (output in sales dollars) for each week using the data provided below to produce chocolate bars. Assume 40-hour weeks and an hourly wage of $18. Overhead is 1.25 times the total weekly labor cost. Material cost is $48 per pound. Standard price to sell is $150 per unit. (10 points) Week Output (units) Workers Material (lbs) 1 2,675 6 1250 2 2,750 7 1300 3 2,875 8 1350 4 3,000 9 1400 b) What do the productivity figures suggest? (What is the trend?) (2 point)

Problem 4) (12 points) Milk is stocked at a grocery store each week. At the end of each week, unsold milk price is reduced by 25% and the store can sell the unsold milk fully at this lower price. If weekly demand for milk is normally distributed with a mean of 200 gallons and standard deviation of 20 gallons, find the price for which a fresh gallon of milk sells. Assume that the store has a service level of 90% and purchases milk for $3.1 per gallon. Bonus Problem: (6 points) (Bonus points will be added to your homework score). A fish distributor is trying to perfect his business to maximize the money he saves. Daily fish sales are normally distributed with a mean of 250 and standard deviation of 30. The distributor sells each fish for $4.50 and pays $1.65 to buy each fish. The distributor must get rid of unsold fish by paying a waste removal facility fee of $0.25 per fish. How many fish should the distributor order each day and what % of the time will he experience a stock-out? Are there any drawbacks to the order size proposed and how could the fisherman address such issues?