Set 2 - Items 11-20

II. Problem Solving.

1.

Suppose that SUA Company has a soda product that shows a constant annual demand rate of 3,600 cases. A case of soda costs $3.00. Ordering costs are $20.00 per order and holding costs are 25% of the value of the inventory. SUA has the lead time of 5 days. Identify or compute the following:

11. Holding Cost per case = a. $9 b. $0.75 c. $0.25

12. Delivery Time = a. 3 days b. 5 days c. 10 days

13. Economic Order Quantity (EOQ) in units = a. 418 b. 428 c. 438

14. Reorder Point = a. 50 b. 100 c. 150

15. Total Annual Cost = a. $308 b.$318 c.$328

2.

Apply the EOQ Model to the following quantity discount situation in which D=500 units per year, Co=P40.00, and the annual holding cost rate is 20%. Identify the following:

Discount Category Order Size Discount (%) Unit Cost

1 0 to 99 0 P10.00

2 100 or more 3 P 9.70

16. Holding Cost of Discount Category 1 = a. P0 b. 2 c. P10

17. Holding Cost of Discount Category 2 = a. 1.94 b. 2 c. 3.54

18. Optimal Quantity of Discount Category 1 = a. 141 b. 142 c. 143

19. Optimal Quantity of Discount Category 2 = a. 141 b. 142 c. 143

20. What order quantity do you recommend? a. 143 b. 142 c. 141