Quantitative Methods
Prob 1
| This is a graded assignment reflecting your own work only. Students are not permitted assistance from other students or tutors. | |
| 1. (6 pts) R&B Beverage offers a drink product with near constant demand of 3600 cases annually. It costs $20 | |
| to place each order and the cost of storing one case is $0.75 per year. | |
| a. Construct a graph of order cost, storage cost, and total cost (for order quantities up to 600 cases) | |
| and estimate from your graph the economic order quantity (EOQ). | |
| b. Calculate (via formula) the economic order quantity (EOQ) for R&B Beverage. | |
Prob 2
| This is a graded assignment reflecting your own work only. Students are not permitted assistance from other students or tutors. | |
| 2. (6 pts) The annual demand for a product is 1500 units. Each unit costs $2.50 for orders less than 500 and $2.25 for orders | |
| of 500 or more. An order costs $20 to set up and the annual stock holding cost is 20% of the average value of stock held. | |
| a. Determine the optimum stock ordering policy. | |
| b. What is the total cost of the optimum policy? | |
Prob 3
| This is a graded assignment reflecting your own work only. Students are not permitted assistance from other students or tutors. | |
| 3. (6 pts) A chemical company uses chlorine in production of a product. The amount of chlorine used is normally distributed | |
| with an average of 250 gal/day and standard deviation of 45 gallons. The lead time to receive an order of chlorine from | |
| the supplier is 6 days. Determine the buffer stock level such that there is less than a 5% chance of a stockout. | |
Prob 4
| This is a graded assignment reflecting your own work only. Students are not permitted assistance from other students or tutors. | |
| 4. (7 pts) Annual demand for a manufacturing component is 5000 units. The component costs $22 per unit. Order | |
| costs are $80 per order and stockholding cost is $5 per component. The manufacturing plant operates 300 | |
| days per year. Assume that stock replenishment is instantaneous. | |
| a. Determine the economic order quantity for this component. | |
| b. Using the EOQ, what would be the time between stock replenishments and how many orders | |
| per year are anticipated? | |
| c. The company currently orders 250 components per order. What would be the total annual cost savings | |
| if the company switched to an EOQ order policy? | |
Check Values
| 1.a. (for example) | Check values may be only intermediate calculations. | ||||||||
| Some may not be final solutions. | |||||||||
| 1.b. EOQ = 439 cases | |||||||||
| 2.a. | |||||||||
| 2.b. Tot cost = $3547.50 | |||||||||
| 3. 1682 gallons | |||||||||
| 4.a. EOQ = 400 | |||||||||
| 4.b. 24 days between orders | |||||||||
| 4.c. | |||||||||