You work at an appliance store and realize that the demand is stable and EOQ assumptions...

 

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You work at an appliance store and realize that the demand is stable and EOQ assumptions are satisfied. You further collect the following data for the bestselling washer: • Average annual sales = 3000 units • Ordering cost = $300 per order • Carrying cost = 20% of the item cost per year Item cost = $400 per unit Lead time = 10 days Working days per year = 250 a) After noticing that the store's current inventory policy is suboptimal, you want to impress your manager by making a proposal for improvement. What is the optimal order policy for this washer (write in the format of [R,Q*])? b) What is the total ordering cost under the optimal order policy? c) What is the total holding cost under the optimal order policy? d) Consider your answers in part b and c. Which one of the following is correct (circle one)? Explain why? • Total ordering cost-total holding cost • Total ordering cost>total holding cost • Total ordering cost<total holding cost e) The supplier is willing to offer a 3% discount if you are willing to receive shipments of washers every 6 months. Would you take this discount if you want to minimize the annual total cost? You work at an appliance store and realize that the demand is stable and EOQ assumptions are satisfied. You further collect the following data for the bestselling washer: • Average annual sales = 3000 units • Ordering cost = $300 per order • Carrying cost = 20% of the item cost per year Item cost = $400 per unit Lead time = 10 days Working days per year = 250 a) After noticing that the store's current inventory policy is suboptimal, you want to impress your manager by making a proposal for improvement. What is the optimal order policy for this washer (write in the format of [R,Q*])? b) What is the total ordering cost under the optimal order policy? c) What is the total holding cost under the optimal order policy? d) Consider your answers in part b and c. Which one of the following is correct (circle one)? Explain why? • Total ordering cost-total holding cost • Total ordering cost>total holding cost • Total ordering cost<total holding cost e) The supplier is willing to offer a 3% discount if you are willing to receive shipments of washers every 6 months. Would you take this discount if you want to minimize the annual total cost?

Answer rating: 100% (QA)

a The optimal order policy for the washer can be calculated using the Economic Order Quantity EOQ formula EOQ 2 Average Annual Sales Ordering Cost Car... View the full answer