Reference no: EM132835052

BIM401 Logistics and Supply Chain Management - Emirates College of Technology

Problem 1:
A company makes bicycles. It produces 450 bicycles a month. It buys the tires for bicycles from a supplier at a cost of $20 per tire. The company's inventory carrying cost is estimated to be 15% of cost and the ordering is $50 per order.

1. Calculate the EOQ:

2. What is the number of orders per year?

3. Compute the average inventory

4. Compute the total cost.

Problem 2:

Assume that our firm produces type C fire extinguishers. We make 30,000 of these fire extinguishers per year. Each extinguisher requires one handle (assume a 300 day work year for daily usage rate purposes). Assume an annual carrying cost of $1.50 per handle; production setup cost of $150, and a daily production rate of 300. What is the optimal production order quantity?

Problem 3:

We need 1,000 electric drills per year. The ordering cost for these is $100 per order and the carrying cost is assumed to be 40% of per unit cost. In orders of less than 120, drills cost $78; for orders of 120 or more, the cost drops to $50 per unit.

Should we take advantage of the quantity discount?

Attachment:- Logistics and Supply Chain Management.rar