RSS

EOQ Assignment

20 Feb

EOQ Assignment

You are the company’s Supply Chain Manager — solve the below questions to ensure an optimal ordering policy.

Annual requirements (R)  =    16,242     units        Place EOQ graph here….
Order cost (S) =    $68.00     per order
Holding rate (k) =    28.0%    annually
Unit cost (C) =     $52.87     per unit
Lead time (LT) =    4    days
Number of days per year =    365    days

Compute the following:
Note:  You must include formulas for full credit — do NOT simply type in answers.  Add additional cells if necessary, but label each clearly!
a) EOQ =        units
EOQ (rounded to nearest whole item)        units
b) total purchase cost =
c) annual holding cost =
d) annual order cost =
e) total annual logistics cost =        (without purchase cost)
f) reorder point        units  (note: no variability in demand or lead-time in this situation)
g) number of orders placed per year =        orders
h) time between orders =         days
i) plot cost curves — holding cost, order cost and total cost.  Use the layout below the questions, if needed.
j)  If you are required to order by the whole case, at 20-per case, what Q would you recommend?        units
k)  What is the new Total Annual Logistics Cost of the Whole-Case Q?        (suggestion — you can compute here, or just change your Q above where your EOQ is and see the resulting costs — don’t forget to undo this change to put EOQ back!)
l) What is the difference in Total Annual Logistics Cost of EOQ and that of the Whole-Case Q?
m) Given your answer to K above, what does this say about the EOQ Formula?
n) Your CEO just announced that inventory levels must be cut by 10% in order to reduce costs (based on original EOQ).  What would your new Q need to be?        units
o) Based on your new Q from above, you will actually raising costs unless you can change S too. What would your new S need to be?
p) How much must S be reduced from the current cost-per order to reach your new goal?
q)  List 3 specific ways in which you can lower S in order to reach your  goal?    1)
2)
3)

Q    Annual Holding Cost    Annual Ordering Cost    Total Cost
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
475
500
525
550
575
600
625
650
675
700
725
750
775
800
825
850
875
900

 
Leave a comment

Posted by on February 20, 2017 in Academic Writing

 

Tags:

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: