Paul's Pasta Pinwheels Essay
1. The current order quantity for Paul’s Pasta Pinwheels is 200 boxes. The order cost is $4 per order, the holding cost is $.40 per box per year, and the annual demand is 500 boxes per year.
Current order quantity 200 boxes Ordering cost $ 4.00 per order holding costs $ 0.40 per box Annual demand 500 boxes
a. Calculate the annual holding cost plus the annual ordering cost to get the total costs when using an order quantity of 200 boxes. Order quantity 200 Boxes Annual ordering Costs =500 boxes /200 boxes* cost per order Annual ordering Costs =2.5 orders *$4 per order Annual ordering Costs $ 10.00 Annual holding costs = average inventory level* holding cost per unit per year Annual holding costs …show more content…
= order quantity/2*holding cost per unit per year Annual holding costs = 200/2*0.40 Annual holding costs $ 40.00
b. Calculate the EOQ and the total annual cost for this order quantity. EOQ = SQRT(2*Annual demand* cost per order)/ holding cost per unit per year) EOQ = SQRT(2*500*4)/0.40) EOQ 158 boxes Total Annual cost : Holding Costs (158/2*0.40) $ 31.60 Ordering Costs (500/158)*4 $ 12.66 Total Annual cost $ 44.26
2. Hottenstien, Giffith, and Hult, attorneys at law, do a great deal of printing. The firm uses a single type of printer with annual demand for print cartridges of 480 per year. The order cost is $15 per order, and the carrying cost is 20% per cartridge per year of the purchase cost of $35 per cartridge.
Annual Demand 480 Ordering cost $ 15.00 per order Carrying Cost 20% Purchase cost $ 35.00
a. How many print cartridges should the firm order at one time? EOQ = SQRT(2*Annual demand* cost per order/Holding cost per unit per year) EOQ = SQRT(2*480*15/35*0.20) EOQ 9.07 print cartridges
b. What is the time between orders? Number of orders = Annual demand / EOQ Number of orders = 480/9 Number of orders 53 orders Time between orders = 365/ No. of orders Time between orders = 365/ 53 Time between orders 7 days
4. Burgerama requires all employees who handle food to wear latex gloves for sanitary reasons. The annual demand for the gloves is 250 boxes of 200 per year. The order cost is 25 percent per box per year of the purchase cost of $20 per Box.
D 250
S 5
H 5 it assume that holding=.25*20
a. How many boxes of gloves should Burgerama order at a time?
Q* 22.36067977
b. What is the time between orders?
# of order=D/Q 11.18033989 time between orders 32.19937888
360/# OF order
c. What would be the change in annual cost if Burgerama had storage space for only 15 boxes per order and thus was forced to use an order of 15? cost =d/q *S +q/2 *H current 111.8033989 new 120.8333333 change 9.029934407
5.
Office Express sells office suppliers to businesses on a membership basis--i.e., walk-in customers without a membership are not allowed. The company delivers supplies directly to the purchaser as long as minimum purchase of $100 is made. In order to encourage bulk orders, Office Express offers the following discount schedule on purchase quantities of boxes of paper. Larry's lumber has an annual demand of 5,000 boxes of paper, a setup cost of $10 per order, and a holding cost of 22 percent of the purchase price. Calculate the optimal order quantity.
1-100 boxes $5 per box
100-249 boxes $4.75 per box
250-499 boxes $4.50 per box
500 or more $4.25 per box D 5000 S 10 slide price holding % h q*=(2D*s/h)^.5
1-100 5 0.22 1.1 150.76
100-249 4.75 0.22 1.045 154.67
250-499 4.5 0.22 0.99 158.91
500 or ovr 4.25 0.22 0.935 163.52 it is optimal as it locate in slide 100-249
6. A watch repair shop buys batteries for a variety of products. The most frequent battery purchase is for a Y300, with demand of 3,000 per year. the order cost is $15 per order, and the holding cost is $0.50 per battery. Given the following price schedule, calculate the optimal order.
Number of Batteries Price
1-250 $6.00
250-499 $5.50
500-999 $5.00
1,000 or more $4.75 D 300 S 15 slide price h q*=(2D*s/h)^.5
1-250 6 0.5 67.08
250-499 5.5 0.5
67.08
500-999+ 5 0.5 67.08
1000 or more 4.75 0.5 67.08
REFERENCES:
Boyer, K., and Verma, R. (2010). Operations and Supply Chain Management for the 21st Century1st Edition Mason, OH: South-Western (Cengage).
Current order quantity 200 boxes Ordering cost $ 4.00 per order holding costs $ 0.40 per box Annual demand 500 boxes
a. Calculate the annual holding cost plus the annual ordering cost to get the total costs when using an order quantity of 200 boxes. Order quantity 200 Boxes Annual ordering Costs =500 boxes /200 boxes* cost per order Annual ordering Costs =2.5 orders *$4 per order Annual ordering Costs $ 10.00 Annual holding costs = average inventory level* holding cost per unit per year Annual holding costs …show more content…
= order quantity/2*holding cost per unit per year Annual holding costs = 200/2*0.40 Annual holding costs $ 40.00
b. Calculate the EOQ and the total annual cost for this order quantity. EOQ = SQRT(2*Annual demand* cost per order)/ holding cost per unit per year) EOQ = SQRT(2*500*4)/0.40) EOQ 158 boxes Total Annual cost : Holding Costs (158/2*0.40) $ 31.60 Ordering Costs (500/158)*4 $ 12.66 Total Annual cost $ 44.26
2. Hottenstien, Giffith, and Hult, attorneys at law, do a great deal of printing. The firm uses a single type of printer with annual demand for print cartridges of 480 per year. The order cost is $15 per order, and the carrying cost is 20% per cartridge per year of the purchase cost of $35 per cartridge.
Annual Demand 480 Ordering cost $ 15.00 per order Carrying Cost 20% Purchase cost $ 35.00
a. How many print cartridges should the firm order at one time? EOQ = SQRT(2*Annual demand* cost per order/Holding cost per unit per year) EOQ = SQRT(2*480*15/35*0.20) EOQ 9.07 print cartridges
b. What is the time between orders? Number of orders = Annual demand / EOQ Number of orders = 480/9 Number of orders 53 orders Time between orders = 365/ No. of orders Time between orders = 365/ 53 Time between orders 7 days
4. Burgerama requires all employees who handle food to wear latex gloves for sanitary reasons. The annual demand for the gloves is 250 boxes of 200 per year. The order cost is 25 percent per box per year of the purchase cost of $20 per Box.
D 250
S 5
H 5 it assume that holding=.25*20
a. How many boxes of gloves should Burgerama order at a time?
Q* 22.36067977
b. What is the time between orders?
# of order=D/Q 11.18033989 time between orders 32.19937888
360/# OF order
c. What would be the change in annual cost if Burgerama had storage space for only 15 boxes per order and thus was forced to use an order of 15? cost =d/q *S +q/2 *H current 111.8033989 new 120.8333333 change 9.029934407
5.
Office Express sells office suppliers to businesses on a membership basis--i.e., walk-in customers without a membership are not allowed. The company delivers supplies directly to the purchaser as long as minimum purchase of $100 is made. In order to encourage bulk orders, Office Express offers the following discount schedule on purchase quantities of boxes of paper. Larry's lumber has an annual demand of 5,000 boxes of paper, a setup cost of $10 per order, and a holding cost of 22 percent of the purchase price. Calculate the optimal order quantity.
1-100 boxes $5 per box
100-249 boxes $4.75 per box
250-499 boxes $4.50 per box
500 or more $4.25 per box D 5000 S 10 slide price holding % h q*=(2D*s/h)^.5
1-100 5 0.22 1.1 150.76
100-249 4.75 0.22 1.045 154.67
250-499 4.5 0.22 0.99 158.91
500 or ovr 4.25 0.22 0.935 163.52 it is optimal as it locate in slide 100-249
6. A watch repair shop buys batteries for a variety of products. The most frequent battery purchase is for a Y300, with demand of 3,000 per year. the order cost is $15 per order, and the holding cost is $0.50 per battery. Given the following price schedule, calculate the optimal order.
Number of Batteries Price
1-250 $6.00
250-499 $5.50
500-999 $5.00
1,000 or more $4.75 D 300 S 15 slide price h q*=(2D*s/h)^.5
1-250 6 0.5 67.08
250-499 5.5 0.5
67.08
500-999+ 5 0.5 67.08
1000 or more 4.75 0.5 67.08
REFERENCES:
Boyer, K., and Verma, R. (2010). Operations and Supply Chain Management for the 21st Century1st Edition Mason, OH: South-Western (Cengage).