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    Quiz 3 - Mar 2014

    Uploaded by

    manojboa
    The document contains 4 questions regarding optimal order quantity calculations using the economic order quantity (EOQ) model. Question 1 involves determining the optimal order quantity, number of orders per year, and total annual inventory cost for an item with an annual demand of 5400 units. Question 2 involves similar calculations for furniture chairs with an annual demand of 200 units. Question 3 involves determining the optimal order quantity for hospital syringes given quantity discounts and an annual demand of 40,000 units. Question 4 involves calculating the optimal order quantity, total inventory cost, number of orders per year, and maximum inventory level for paint with an annual demand of 10,000 litres.

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    Quiz 3 - Mar 2014

    Uploaded by

    manojboa
    8 views2 pages
    The document contains 4 questions regarding optimal order quantity calculations using the economic order quantity (EOQ) model. Question 1 involves determining the optimal order quantity, number of orders per year, and total annual inventory cost for an item with an annual demand of 5400 units. Question 2 involves similar calculations for furniture chairs with an annual demand of 200 units. Question 3 involves determining the optimal order quantity for hospital syringes given quantity discounts and an annual demand of 40,000 units. Question 4 involves calculating the optimal order quantity, total inventory cost, number of orders per year, and maximum inventory level for paint with an annual demand of 10,000 litres.

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    quiz 3 - mar 2014

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    The document contains 4 questions regarding optimal order quantity calculations using the economic order quantity (EOQ) model. Question 1 involves determining the optimal order quantity, number of orders per year, and total annual inventory cost for an item with an annual demand of 5400 units. Question 2 involves similar calculations for furniture chairs with an annual demand of 200 units. Question 3 involves determining the optimal order quantity for hospital syringes given quantity discounts and an annual demand of 40,000 units. Question 4 involves calculating the optimal order quantity, total inventory cost, number of orders per year, and maximum inventory level for paint with an annual demand of 10,000 litres.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    8 views2 pages

    Quiz 3 - Mar 2014

    Uploaded by

    manojboa
    The document contains 4 questions regarding optimal order quantity calculations using the economic order quantity (EOQ) model. Question 1 involves determining the optimal order quantity, number of orders per year, and total annual inventory cost for an item with an annual demand of 5400 units. Question 2 involves similar calculations for furniture chairs with an annual demand of 200 units. Question 3 involves determining the optimal order quantity for hospital syringes given quantity discounts and an annual demand of 40,000 units. Question 4 involves calculating the optimal order quantity, total inventory cost, number of orders per year, and maximum inventory level for paint with an annual demand of 10,000 litres.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Quiz 3

    MM 25 / Time 60 min

    Question 1:
    Spencers Hypermart is planning to stock a new brand of detergent. It hopes to sell 5400 units of 5
    kg bags of this detergent this year. It also expects the cost of the detergent brand to remain
    constant throughout the year at 365 per 5kg bag. Each time Spencers places an order it will
    incur a cost of 55. If the cost of carrying the inventory is 28% per year of inventory value held,
    a Determine the optimal number of units per order
    b. Find the optimal number of orders/year
    c. Find the annual total inventory cost [6]
    Question 2:
    Mehidpur Furniturewala handles several lines of furniture, one of which is the popular electric
    back massage chair. The store manager, has decided to determine, by use of the EOQ model, the
    best quantity to obtain in each order. He checked and found from past invoices that he has sold
    about 200 chair during each of the past five years at a fairly uniform rate and he expects to
    continue at that rate. He has estimated that preparation of an order and other variable costs
    associated with each order are about 10,000, and it costs him about 1.5 % per month (or 18% per
    year) to hold items in stock. His cost for the chair is 8700.
    a How many of these chairs should be ordered each time?
    b How many orders would the store have to place in a year?
    c Determine the approximate gap between two orders?
    d Calculate the minimum total inventory cost
    e Show and verify that the annual holding cost is equal to the annual ordering cost (due to
    rounding related errors, just show that these costs are approximately equal) [10]
    Question 3:
    Narmada Hospital orders syringes from a hospital supply firm. The hospital expects to use 40,000
    syringes this year. The cost to order and have the syringes delivered is Rs800. The annual carrying
    cost is Rs1.90 per syringe because of security and theft. The hospital supply firm offers the
    following quantity discount pricing schedule.
    COST/
    UNIT
    0-9999
    3.4
    10000-19999
    3.2
    20000-29999
    3.15
    30000-39999
    3.1
    40000-49999
    3.05
    50000+
    3
    Determine the optimal order size for the hospital. [5]
    SLAB

    Question 4:
    Asian Paints has its own manufacturing facility in which it produces Tractor White paint.
    The ordering cost, k, is the cost of setting up the production process to make paint. k=Rs150/
    order. Recall that hc=Rs0.75 per litre and annual demand A= 10,000 litres per year.
    The manufacturing facility operates for 300 days and produces 150 litres of paint per day.
    Determine
    (i) the optimal order size,
    (ii) total inventory cost,
    (iii) the number of orders per year, and
    (iv) the maximum inventory level. [4]

    Solution:
    a. X0 = 2CB/zp = 2*5400*55/365*0.28 = ~76 units/order
    b. N0 = C/X0 =5400 / 76 = ~71 orders/year
    c. Ke= 2CBzp = 2*5400*55*365*0.28 = 7791.46 MU/year.

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