4-1 Problem Set: Calculating Quantities and Annual Costs
For this assignment, you will calculate quantities and annual costs to answer two supply chain questions. When you are finished, submit your answers for review by your instructor.
Question 1
A distribution center sells Sony televisions to retailers at a constant demand rate of 20,000 units per year. It costs the distribution center $500 to place an order. Also, the price the distribution center pays the manufacturer for each unit is $350. The inventory holding cost is $30 per unit per year. The material cost is $250 per unit. Assume that the lead time from the manufacturer to the distribution center is zero years, and that the initial inventory at the distribution center is zero units. Calculate the economic order quantity and the total annual cost.
Question 2
Calculate the total annual cost change if the order quantity had to be decreased to 250 units per order.
make sure two add 3-4 apa format sources and also make sure is less than 50% turnitin score be sure is not plagiarized okay?
UPDATE:
I already answer the two questions you just have to paraphrase it
make sure two add 3-4 apa format sources and also make sure is less than 50% turnitin score be sure is not plagiarized okay?
4-1 Problem Set: Calculating Quantities and Annual Costs
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Question 1
Economic order quantity is the most suitable order size that a company should acquire to minimize the combined order costs and storage costs (Senthilnathan, 2019). Storage costs refer to the cost of physically storing the stock, while order costs refer to the costs of ordering the stock from the supplier (Kumar, 2016). The EOQ model consists of the following assumptions:
* The stock is monitored, and an order is made at a specific re-order point
* Demand is known and constant
* Stock-outs do not occur
* Lead time is constant
* Only one item is involved
Although all the above assumptions do not always hold, the EOQ model gives us valid evidence of whether the current order quantities are practicable (Simamora, 2015).
The EOQ formula is given by
EOQ = 2CDh
Where, EOQ is the economic order quantity, C is the cost of placing an order, D is the demand per annum, and h is the cost of storing 1 unit for 1 ye...
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