Elect 2 [PDF]

Zitiervorschau

1. Garden Variety Flower shop uses 750 clay pots a month. The pots are purchased at $2each. Annual carrying costs per pot are estimated to be 30% of cost. Ordering costsare $20 per order. Manager has been using an order size of 1,500 flower pots. GIVEN: D = 750 pots/mo. x 12 mo./yr. = 9,000 pots/yr. Price = $2/pot S = $20 P = $50 H = ($2)(.30) = $.60/unit/year a. What is the annual total cost incurred by the shop due to current ordering policy? 1,500 9,000 (. 6) + (20) 𝑇𝐶 = 2 1,500 𝑇𝐶 = 450 + 120 = $𝟓𝟕𝟎 b. What is the cost minimizing ordering quantity? 𝑄𝑜 = √2𝐷𝑆 𝐻 𝑄𝑜 = √2(9,000)20 = 774.60 .60 c. What is the annual total cost for the ordering policy in b) 774.6 9,000 (. 6) + (20) 2 774.6 𝑇𝐶 = 232.35 + 232.36 = 464.71/𝑦𝑒𝑎𝑟 𝑇𝐶 =

d. Compare and comment on the answers you got for a) and c) Less cost, less inventory e. How many months should be between two consecutive orders? 775/750=1.03 f. Assume the lead time is two weeks and the shop works 4 weeks per month. If the company wishes to carry no safety stock what is the reorder point? d=750/4=187.5/week LT=2weeks ROP=187.5*2=375 g. If the manager mistakenly computed the inventory holding cost as 40 percent of cost of a pot, what would be the economic order quantity based on the wrong holding cost? (Round your answer to the nearest integer.) H’ = 0.4*2=0.8671

𝑄𝑜 = √

2𝐷𝑆 𝐻

𝑄𝑜 = √

2(9,000)20 = 671 . 80

h. Suppose the store uses the wrong order quantity calculated in part f). However, the actual carrying cost is 30 percent of cost of a pot. What total annual cost does the store incur when using the wrong order quantity? (Round your answer to the nearest integer.) 𝑇𝐶 =

671 9,000 (. 60) + (20) = 470/𝑦𝑒𝑎𝑟 2 671