What order quantity would minimize Cal-tire's total inventory costs for the P215/60R16?

60 units

35 units

120 units

17 units

24 units

2. At what inventory level should Cal-tire reorder?

20 units

960 units

600 units

2 units

32 units

3. what would be the total annual cost of ordering the EOQ quantity?

$147600

$13950

$182100

$180000

$16138

4. Goodyear has just changed their pricing policy on the P215/60R16. If cal-tire orders at least 700 tires at a time, the unit cost would drop to $95 each. What would be the total annual cost of ordering 700 tires at a time?

$133340

$183340

$26508

$143040

$182728

5. If cal-tire uses an order quantity of 200 tires at a time, what would be their average number of orders placed per year?

6

120

60

100

9

Transcribed Image Text:

Cal-Tire, an independently owned and operated tire retailer here in Calgary is trying to improve how they manage their tire inventory. They have asked you for guidance on their most popular tire, the Goodyear all-season model P215/60R16. Although Cal- Tire sells this model for $175 each, they pay Goodyear only $100 each to purchase them. Demand has been steady at 150 tires per month. Cal-Tire's inventory management software can interface with other software programs so this results in low administration for each purchase order, estimated at a cost of only $35 per order. Cal-Tire has a large storage area in their facility. Annual holding costs are estimated at 35% of each item's unit cost. Since they can always substitute an alternative model of tire, Cal-Tire does not hold any safety stock. Assume they operate 30 days per month (360 days per year). Goodyear delivers each order 4 days after they receive it. Cal-Tire, an independently owned and operated tire retailer here in Calgary is trying to improve how they manage their tire inventory. They have asked you for guidance on their most popular tire, the Goodyear all-season model P215/60R16. Although Cal- Tire sells this model for $175 each, they pay Goodyear only $100 each to purchase them. Demand has been steady at 150 tires per month. Cal-Tire's inventory management software can interface with other software programs so this results in low administration for each purchase order, estimated at a cost of only $35 per order. Cal-Tire has a large storage area in their facility. Annual holding costs are estimated at 35% of each item's unit cost. Since they can always substitute an alternative model of tire, Cal-Tire does not hold any safety stock. Assume they operate 30 days per month (360 days per year). Goodyear delivers each order 4 days after they receive it.

Answer rating: 100% (QA)

Monthly demand 150 units Annual demand D 150 12 1800 units Ordering cost per order S 35 Cost of each ... View the full answer