Submit problems $1-3$ via the dropbox on D$2$L$.$ YOU DO NOT HAVE TO TYPE TEIS

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$1.)$ Thaarugo produces a GPS device that is becoming popular in parts of

Scandinavia. When Thaarugo produces one of these, a printed circuit board $($PCB$)$ is

used and it is populated with several electronic components. Thaarugo determines that it

needs about $16,500$ of this type of PCB each year. Demand is relatively constant

throughout the year and the ordering cost is about $$\frac{20}{?}$ order; the holding cost is $25\%$ of

the price of each PCB$.$ Two companies are competing to become the dominant supplier

of PCB $,$ and both have offered quantity discounts as shown in the following table.

RMMIMBAR TO BXPLCCITLY WRITIE THIS FORMULAS USGD AND TIEIS VALUE

FOR MACH VARIABLO.

Which of the two suppliers should be selected if Thaarugo wishes to minimize total annual

inventory costs? Explain.

$2.)$ Current decision to buys Ross White's machine shop uses $175$ brackets each month during

the course of a year. This usage is relatively constant throughout the year. Currently, these

brackets are purchased from a supplier $100$ miles away for $$15$ each and the lead time is $3$ days.

The holding cost per bracket per year is $$1\mathrm{.}50(10\%$ of the unit cost$)$ and the annual ordering cost

per order is $$19,50.$ There are $240$ working days per year.

Possible future decision to make in houser Ross White is reconsidering his decision of buying

the brackets and is considering making the brackets in$-$house. He has determined the set up costs

would be $$22\mathrm{.}50$ in machinist time and lost production time. Fifty brackets could be p

ROMOMBOR TO BXPLTCILLY WRITE THE FORMULAS USOD AND THE VALUE

DOR cac: VArIABLE.

Which of the two suppliers should be selected if Thasugo wishes to minimize total annual

Inventory costs? Explain.

$2.)$ Current decision to buy: Ross White's machine shop uses $175$ brackets each month during.

the course of a year. This usage is relatively constant throughout the year. Currently, these

brackets are purchased from a supplier $100$ miles away for $$15$ each and the lead time is $3$ days.

The holding cost per bracket per year is $$1\mathrm{.}50(10\%$ of the unit cost$)$ and the annual ordering cost

per order is $$19\mathrm{.}50.$ There are $240$ working days per year.

Possible future decision to make in$-$house: Ross White is reconsidering his decision of buying

the brackets and is considering making the brackets in$-$house. He has determined the set up costs

would be $$22\mathrm{.}50$ in machinist time and lost production time. Fitty brackets could be produced in

a day once the machine has been set up$.$ Ross estimates that the cost $($including labor and

materials$)$ of producing one bracket would be $$15\mathrm{.}75.$ The holding cost would be $10\%$ of the

cost$.$

a$.$ What is the EOQ given Ross' current decision to buy the brackets? What is the total annual

$cos$ t$?$

b$.$ If Ross wants to start making the brackets in$-$house, what is the optimal production quantity?

What is the total annual cost?

c$.$ Based on ALht the information you have, which decision should Ross make and why?

A company produces a part that is used in its production process. The company produces the

part at a rate of $300$ units per day. The daily demand for the product is $180$ units. The annual

demand for the part is $56,000$ units and occurs consistently over the $300$ days that the company

operates yearly, The company incurs a setup cost of $$315$ each time the item is produced. The

cost of carying the item in inventory is estimated to be $20$ percent of the item's $$140$ cost$.$ How

many units should the company produce cach production run to minimize its inventory$-$

associated costs?