XYZ is a crates retailer company in Dorset and the company's operations manager currently orders 800...

 

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XYZ is a crates retailer company in Dorset and the company's operations manager currently orders 800 packing crates per month at a cost of 10/unit. Orders are currently placed once per month. Ordering costs are 28/order and the annual carrying cost is 35% of the purchase price per crate. The lead time is 5 days. 365 working days are assumed since none was given. Demand is assumed to be consistent throughout the year. (a) What is the economic order quantity (EOQ) value that will be made annually for this retailer? (10 marks) (b) How much could the retailer company save annually in ordering and carrying costs by using the EOQ found in Q2(a)? (c) What is the number of orders per year for this retailer using EQQ? (5 marks) (5 marks) (d) What is the time between orders per year (cycle times) for this retailer using EOQ? XYZ is a crates retailer company in Dorset and the company's operations manager currently orders 800 packing crates per month at a cost of 10/unit. Orders are currently placed once per month. Ordering costs are 28/order and the annual carrying cost is 35% of the purchase price per crate. The lead time is 5 days. 365 working days are assumed since none was given. Demand is assumed to be consistent throughout the year. (a) What is the economic order quantity (EOQ) value that will be made annually for this retailer? (10 marks) (b) How much could the retailer company save annually in ordering and carrying costs by using the EOQ found in Q2(a)? (c) What is the number of orders per year for this retailer using EQQ? (5 marks) (5 marks) (d) What is the time between orders per year (cycle times) for this retailer using EOQ?

Answer rating: 100% (QA)

a The economic order quantity EOQ formula is EOQ 2DSH where D annual demand S ordering cost per orde... View the full answer