Carls: Customer Service Department

1.
A233 parts
Weekly demand=32,LT=1 week,Price=$18/unit,Ordering cost=$16/unit
Demand per year=32x52=1664
*D=demand,Q=quantity,Oc=Ordering cost,P=Price.
EOQ=>Ordering cost= Carrying cost=>(D/Q) x Oc=(Q/2) x P x 23%=>1664/Qx16=(Q/2) x 18 x 23%=>114

A) When Q=EOQ=114,
Ordering cost=1664/114x16=$233.54
Carrying cost=(114/2) x18 x23%=$235.98
Therefore total cost= Ordering cost + Carrying cost=234+236=$469.52

B) When Q= 64,
Ordering cost = 1664/64x16=$416
Carrying cost = (64/2) x 18 x 23%=$132.48
Therefore Total cost= Ordering Cost+ Carrying cost = 416+132.48=$548.48

C) When taking price break,Q= 200,P*= 18-2= $16
Ordering cost= 1664/200 x 16= $133.12
Carrying Cost= (200/2) x 16 x23%=$368
Therefore Total spend cost= Ordering Cost+ Carrying cost+ Inventory cost= 113.12+ 368+ 1664x 16=$27125.12
When Q= EOQ= 114,
Total spend cost=469.52+ 1664+ x18= $30421.52

P656 parts

Weekly demand= 120,LT= 2 weeks, Price= $35/unit, Ordering cost= $2/unit
Demand per year= 120x52= 6240,
*D=demand,Q=quantity,Oc=Ordering cost,P=Price
EOQ=>Ordering Cost=Carrying cost=>(D/Q) x Oc= (Q/2) x P x23%=>6240/Qx2=(Q/2)x35x23%=>Q=56

When Q=WOQ=56,
Ordering cost=6240/56x2=$222.86
Carrying cost=(56/2)x35x23%=$225.40
So Total cost=Ordering cost+Carrying cost=222.86+225.40=$448.26
When Q=350,
Ordering cost=6240/350x 2=$35.66
Carrying cost= (350/2) x 35x 23%= $1408.75
So total cost= Ordering cost+ Carrying cost=35.66+1408.75=1444.41

The calculated amount after the price break is lower then prior to the introduction of the price break, Carl’s computer should pursue the price break because considering the current demand per week is 32 by ordering 200 at a time, it is enough to sustain Carl’s s demand for 6.25 weeks. It will also reduce the amount of labour and documentation for the Purchasing department thus they can channel this access energy to needed areas.

Carl’s Computer Capabiltiy points. * They strive in unique