SCM 366 001 HW 1 and HW 2
Delivery Charges
Production Cost
Annual Holding Cost per Unit
S
C
h
$
$
Weekly Usage (gallons)
Annual Demand
Order Quantity
D
$
$
Annual Holding Cost per Unit per year
Number of Orders Per Year
Average Inventory
Annual Ordering Cost
Annual Holding Cost
EOQ
Q
H = h*C
D/Q
Q/2
(D/Q)*S
(Q/2)*H
??? =
35.00
1.20
35%
250.00
13,000.00
2500
$
$
$
$
2 ∗ ? ∗ ???
???
0.42
5.20
1250
182.00
525.00
$
1,472.00
.06473697917 =
6.474%
a.
$
$
525.00
182.00
AHC
AOC
$
707.00
b.
$
$
105.00
910.00
AHC
AOC
$
1,015.00
c.
d.
e.
Ordering Cost Sensitivity
$
500 $
1000 $
1500 $
2000 $
2500 $
3000 $
$
182.00
910.00
455.00
303.33
227.50
182.00
151.67
Holding Cost Sensitivity
$
525.00
500 $
105.00
1000 $
210.00
1500 $
315.00
2000 $
420.00
2500 $
525.00
3000 $
630.00
1,472
Annual Cost of Holding and Ordering = (13,000*x/500) + (500*$0.42/2)
$900 = (13,000*x/500) + (500*$0.42/2)
$900 = (26 *x) + $105
$900 - $105 = (26 *x)
$795 = 26 * x x = $795 / 26 =
30.58
f.
Scenario
Demand Ratio
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Scenario 5
g.
0.25
0.5
1
2
4
Order Quantity
1000
2000
3000
4000
5000
Annual Ordering
Costs
$
455
$
228
$
152
$
114
$
91
Annual Deamd
EOQ
3,250
6,500
13,000
26,000
52,000
Annual
Holding Costs
$
210.00
$
420.00
$
630.00
$
840.00
$
1,050.00
735.98
1040.83
1471.96
2081.67
2943.92
Total
$
$
$
$
$
665
648
782
954
1,141
Annual
EOQ Cost
$ 309.11
$ 437.15
$ 618.22
$ 874.30
$ 1,236.45
Annual
Purchase Percentage
Cost
$
3,900
7.93%
$
7,800
5.60%
$ 15,600
3.96%
$ 31,200
2.80%
$ 62,400
1.98%
h.
Without Discount
Total Cost
AHC
AOC
Purchase Cost
$
$
$
$
Since total cost with discount option is more than the total cost without discount
1.14 option, he should not order enough malt
0.4
to receive this discount.
With Discount
Production Cost
Holding Cost
Total Cost
AHC
AOC
Purchase Cost
i.
16,218.22
309
309
15,600
$
$
$
$
16,472.88
56.875
1,596
14,820
16218.22 = (13000*35/8000) + (8000*1.2*(1-x)*.35/2) + (13000*1.2*(1-x))
16218.22=455/8 +
Production Cost
Annual Holding Cost per Unit
S
C
h
$
$
Weekly Usage (gallons)
Annual Demand
Order Quantity
D
$
$
Annual Holding Cost per Unit per year
Number of Orders Per Year
Average Inventory
Annual Ordering Cost
Annual Holding Cost
EOQ
Q
H = h*C
D/Q
Q/2
(D/Q)*S
(Q/2)*H
??? =
35.00
1.20
35%
250.00
13,000.00
2500
$
$
$
$
2 ∗ ? ∗ ???
???
0.42
5.20
1250
182.00
525.00
$
1,472.00
.06473697917 =
6.474%
a.
$
$
525.00
182.00
AHC
AOC
$
707.00
b.
$
$
105.00
910.00
AHC
AOC
$
1,015.00
c.
d.
e.
Ordering Cost Sensitivity
$
500 $
1000 $
1500 $
2000 $
2500 $
3000 $
$
182.00
910.00
455.00
303.33
227.50
182.00
151.67
Holding Cost Sensitivity
$
525.00
500 $
105.00
1000 $
210.00
1500 $
315.00
2000 $
420.00
2500 $
525.00
3000 $
630.00
1,472
Annual Cost of Holding and Ordering = (13,000*x/500) + (500*$0.42/2)
$900 = (13,000*x/500) + (500*$0.42/2)
$900 = (26 *x) + $105
$900 - $105 = (26 *x)
$795 = 26 * x x = $795 / 26 =
30.58
f.
Scenario
Demand Ratio
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Scenario 5
g.
0.25
0.5
1
2
4
Order Quantity
1000
2000
3000
4000
5000
Annual Ordering
Costs
$
455
$
228
$
152
$
114
$
91
Annual Deamd
EOQ
3,250
6,500
13,000
26,000
52,000
Annual
Holding Costs
$
210.00
$
420.00
$
630.00
$
840.00
$
1,050.00
735.98
1040.83
1471.96
2081.67
2943.92
Total
$
$
$
$
$
665
648
782
954
1,141
Annual
EOQ Cost
$ 309.11
$ 437.15
$ 618.22
$ 874.30
$ 1,236.45
Annual
Purchase Percentage
Cost
$
3,900
7.93%
$
7,800
5.60%
$ 15,600
3.96%
$ 31,200
2.80%
$ 62,400
1.98%
h.
Without Discount
Total Cost
AHC
AOC
Purchase Cost
$
$
$
$
Since total cost with discount option is more than the total cost without discount
1.14 option, he should not order enough malt
0.4
to receive this discount.
With Discount
Production Cost
Holding Cost
Total Cost
AHC
AOC
Purchase Cost
i.
16,218.22
309
309
15,600
$
$
$
$
16,472.88
56.875
1,596
14,820
16218.22 = (13000*35/8000) + (8000*1.2*(1-x)*.35/2) + (13000*1.2*(1-x))
16218.22=455/8 +