Question: Question: A computer repairman uses 6000 chips per year. Ordering cost is $30 per order and carrying cost is 40 cent per chip. Price schedule

Question:

A computer repairman uses 6000 chips per year. Ordering cost is $30 per order and carrying cost is 40 cent per chip. Price schedule is shown below. It is known that the repairman has 280 working-day in a year.

Quantity	Price ($)
0-99	8.0
100-199	7.95
200-399	7.90
400-599	7.88
600 and more	7.85

(a) What is the EOQ? Briefly explain.

(b) How many times per year does the repairman reorder? Briefly explain.

(c) What is the length of an order cycle? Briefly explain.

(d) What is the total annual cost if the EOQ quantity is ordered? Briefly explain.

(e) What is the total cost if the order quantity is 200 and 400? Briefly explain.

(f) Critically discuss the whole scenario.

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