What is the optimal ordering quantity

Assignment Help Supply Chain Management

Reference no: EM133985662

An Electronics Retail Company has decided to use an EOQ model to determine the optimal ordering quantities for a particular notebook. The product has a forecasted demand of 220 units per year. Because of the small storage space, the inventory holding cost for one unit is $3.75 per month.

The Sales and Marketing team for the Electronics Retail Company has been able to secure a deal with the distributor of the notebooks. Every order that is placed would have a lead time of 3 months and the shipping cost per order is $10,000. There are three prices that the distributor can offer:

$2000 per unit for orders of less than 200
$1800 per unit for orders of 200 to 499
$1600 per unit for orders of 500 or more

a) What is the optimal ordering quantity? What is the total average annual cost of the policy?

b) What is the Reorder Quantity?

c) How high or low would the shipping cost per order have to be until we can get the largest discount on each unit?

d) If the above unit prices were offered as an Incremental Discount (i.e. $2000 for the first 199 units, $1800 for the next 300 units and $1600 for any subsequent units), what is the optimal ordering quantity?

Reference no: EM133985662

Questions Cloud

Level of efficiency in the macro economy : What effect does this have on the public sector borrowing requirement and the level of efficiency in the macro economy.

What is a customer order decoupling point : What is meant by a process? Describe its important features. What is a customer order decoupling point? Why is it important?

South African economy : Draw a graph of an AD and an SRAS curve for the South African economy. Following the decrease in labor productivity, how will the price level and Real GDP

How would you apply this to designing a service : Behavioral scientists suggest that we remember events as snap shots, not movies. How would you apply this to designing a service?

What is the optimal ordering quantity : What is the optimal ordering quantity? What is the total average annual cost of the policy? What is the Reorder Quantity?

Write an summary that persuades others to visit : Have you ever traveled to a place that you found very meaningful and rewarding? Write an summary that persuades others to visit this important place

What is the right to be left alone when you want to be : What is the right to be left alone when you want to be, to have control over your personal possessions, and not to be observed without your consent?

What is the price elasticity of demand for Tesla : What is the price elasticity of demand for Tesla? What would the value of the price elasticity of demand need to be for revenue to go up after the price cut?

Create professional digital content using technology tools : Analyze the cultural, social, and political contexts of historical figures Create professional digital content using appropriate technology tools

User Account

All Pages