Determining the economic order quantity

Assignment Help Operation Management
Reference no: EM13109773

Company A uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Company A uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be \$50 per order. The cost schedule of 2 suppliers are as follows:

 Vendor 1 Vendor 2 Quantity Price/lb Quantity Price/lb 1-499 mce_markernbsp;   17.00 1-399 mce_markernbsp;   17.10 500-999 mce_markernbsp;   16.75 400-799 mce_markernbsp;   16.85 1000+ mce_markernbsp;   16.50 800-1199 mce_markernbsp;   16.60 1200 + mce_markernbsp;   16.25

a) What is the economic order quantity for each supplier?
b) What quantity should be ordered, and which supplier should be used?
c) what is the total cost for the most economic order size?
d) what factor(s) should be considered besides total cost?

Questions Cloud

 Determine probability of all plants being alive after a weak : Botanist is testing three plants and finds that prob of plant A being alive in a weak is 0.3 plant B is 0.6 and plant C 0.5 these probability are indipendant of each other. Determine the probability of all plants being alive after a weak. Describe activity based costing : What are three of the five purposes of a performance measurement system? What are three of the five benefits listed that the right information to the right people can provide? What is the expected ratio of phenotypes in next generation : A black mouse and a white mouse from pure breeding lines are crossed. All of the offspring have gray coat color what is the expected ratio of phenotypes in the next generation? Computing p-value for one sample mean test : Over a period of years, toothpaste has received a mean rating of 5.9, on a 7-point scale, for overall customer satisfaction with the product. Determining the economic order quantity : Company A uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Hypothesis testing-population type-relation-value : Kannon Camera has developed a new camera that it claims can take an average of more than 10 photographs per second. You decide to evaluate the company's claim. Calculate the cost of material : Company A finds profit at \$15,000 inadequate for expanding business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Confidence interval for mean amount of time ham is smoked : Length of smoking time was recorded for each. Mean was =140 hours. Suppose = 8 hours. Determine 95% confidence interval for mean amount of time grocery-store ham is smoked. Explain an individual with sickle cell disease : What affect might you expect the precipitation of hemoglobin S and the subsequent cell sickling to have on oxygen delivery in an individual with sickle cell disease?

Write a Review

These products or services should come from a range of

Choose four products or services that you are interested in learning more about.These products or services should come from a range of industries (such as consumer products, financial services, automotive, entertainment, etc)

What is the average number of customers waiting in line

What is the average number of customers waiting in line? What is the probability of having more than 3 customers in the system?

How would you ensure that your limited sources

If you were CEO of Marriott, how would you ensure that your limited sources of capital were used strategically? In a recessionary economy, would you invest in existing property upkeep and improvement or would you build new hotels?

What ways might these challenges differ

what ways might these challenges differ if the temporary workers have been hired on a temp-to-perm basis rather than on a strictly temporary basis.

Illustrate what would be the minimum cycle time

Illustrate what would be the minimum cycle time that could be achieved if the production was split into 2 lots of 500 parts each. Illustrate what would be the minimum cycle time and inventory levels if the production is broken down into 4 lots of 2..

Determine theoretical number of workstations

An insurance company uses accompanying tasks to process paperwork. Forty claims need to be processed in an eight-hour day. Determine theoretical number of workstations.

Improve the corporate image of your gym

have a goal to meet/exceed monthly membership targets, and maintain/improve the corporate image of your gym

Illustrate what you believe to be proper balance

illustrate what you believe to be proper balance between an employer's legitimate right to conduct a pre-employment screening also a prospective employee's right to privacy.

Calculate the optimal number of orders per year

At Ionic, a large retailer of popular electronics, demand is constant at 32,000 devices per year. The cost of placing an order to replenish stock is \$10, and annual cost of holding a device is \$4 per device.

Find optimal annual cost of ordering and carrying inventory

The Central Valve Company sells industrial valves and fluid control devices. One of Central's most popular valves is the Western, which has an annual demand of 4,000 units.

What you have researched and studied throughout modules

Using what you have researched and studied throughout Modules 1 - 7, write a report addressing a quantitative analysis (QA) project

Find the percentage of value of shipments

The percentage of value of shipments that come from materials for the average manufacturer is, Fed up with her working conditions at the call center.