# Opre 6302 Assignment

864 Words4 Pages
Question 1. a) How many parts should you purchase each time you place an order?   R=800- ORDERING COST Annual carrying cost of capital= 20% .20 lost per dollar R= 50000 H= .80 r= .20 cost per dollar C= unit cost H=rC Qo= √2RS/H= √(2(50,000)(800)/.8) = 10,000 10,000 parts should be purchased each time an order is placed. (b) To satisfy annual demand, how many times per year will you place orders for this part? R/Qo= 50,000/10,000= 5 times per year Question 2: (a) Determine BIM’s total annual cost of production and inventory control. Q= 4 weeks supply = 1600 units R= 400 units a week= 20000 units/ year C= purchase cost per unit= \$1250 X (1-.20)= 1,000 H= holding cost= rC= \$200 per unit / year S= setup cost= 2000 + 93.75 = \$2,093.75 Setups per year= R/Q= 20000/1600= 12.5 Annual setup cost= (R/Q)(S)=12.5X \$2,093.75= \$26,172 Annual Holding cost= (q/2)(H)= (1600 /2)X \$200= \$160,000 Total Annual Cost= Annual Setup Cost+ Annual Holding Cost Total Annual Cost= 26,172+160,000 BIM’S Total Annual Cost= \$186,172 (b) Compute the economic batch size and the resulting cost savings. Qo= √2RS/H= √(2(20000)(2093.75)/200) = 647 Economic Batch size= 647 Annnual setup cost= (R/Q)(S)= (20000/647) X 2093.75= \$64,722 Annual Holding Cost= (Q/2)H= (647/2)X \$200= 64,700 Total Annual Cost= Annual setup cost+ Annual Holding Cost Total Annual Cost= \$64,722+ \$64,700 = \$129,422 Cost savings= \$186,172- \$129,422= \$56,750 Cost savings= \$56,750 Question 3 (a) Compute Victor’s total annual cost of ordering and carrying inventory. Assumption= 52 weeks/year R = 30 dresses per week = 30 X 52 weeks per year = \$1560 Sales price = \$300/dress C = 150 per dress Order Lead Time = 2 weeks Fixed Order Cost = S = \$225 Cost of Capital = r = 20% Annual Holding cost = H = rC = 150 X 20% = \$30 per dress Q = 10 week supply X \$30 Annual