What is the optimal order size for home depot

Assignment Help Operation Management

Reference no: EM132234427

Home Depot purchases shovels from a supplier in China. Home Depot’s stores in the United States sell 200,000 units of shovels each year. Assume a constant demand rate. Each unit costs $10 and annual holding cost is 20 percent of the unit cost. Shipping company charges Home Depot $5500 as a fixed cost per shipment.

a) What is the optimal order size for Home Depot?

b) How many orders does Home Depot place per year when it uses optimal order size?

c) Calculate the annual ordering (set up), holding, and purchase costs under the optimal order size?

d) Suppose Home Depot wants to decrease its optimal order size to 25,000 units to decrease inventories. To do so, by how much should Home Depot reduce its fixed ordering (shipment) cost?

Reference no: EM132234427

Questions Cloud

Restoring customer service in fabrication and assembly plan : Discuss the challenges and lessons learned in industry, relate an example of challenges and lesson learned in the BSG simulation

Analyze and discuss the company and its industry : Term Paper Assignment - Please analyze and discuss the company and its industry, from the perspective of a potential shareholder

Marjorie kelly and the divine right of capital : Marjorie Kelly and the Divine Right of Capital. What distinction does Kelly make about the role of corporations?

What is the average order size : What is the average order size? How much safety inventory should they carry? What should their order-up-to level be?

What is the optimal order size for home depot : What is the optimal order size for Home Depot? Calculate the annual ordering (set up), holding, and purchase costs under the optimal order size?

How new plan and policy will improve organizational culture : Compare the impact of different religious beliefs and practices (choose three to four different religions) and how these affect the organizational culture.

Sewer line which causes her basement to flood : Sally Ms. Richardson has a plumbing problem with her sewer line which causes her basement to flood.

Learning and development : Discusses why learning organizations must document results and provided guiding principles for program evaluation and advice on what to measure

What service level does store achieve with current policy : What service level does store achieve with the current policy? What fill rate does the store achieve with the current policy?

User Account

All Pages