Question

menu iterm. The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria. Judith anticipates a weekly demand of 10 pizzas. The cafeteria is open 45 weeks a 4) Judith Thompson is the manager of the student center cafeteria. She is introducing piza year, 5 days a week. The ordering cost is $15 and the holding cost is $0.40 per pizza per year What is the optimal number of pizzas Judith should order? 5) The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. Currently, the purchase cost is $40 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days. Currently, the company is ordering 500 units each time an order is placed. What should be the reorder point (excluding any safety stock) under the current policy? 6) Rolf Steps is the production manager for a local manufacturing firm. This company staplers and other items. The holding cost is $2 per unit per year. The cost of setting up the production line for this is $25. There are 200 working days per year. The production rate for this product is 80 per day. If the production order quantity is 200 units, what was the daily demand (rounded to the nearest whole unit)? produces

Answer 1

4) The basic EOQ model is a formula for determining the optimal order size that minimizes the sum of carring costs and ordering costs.

The total annual ordering cost is computed by multiplying the cost per order (C_o ) times the number of orders per year. Since annual demand, D, is assumed to be known and to be constant, the number of orders will be D/Q, where Q is the order size and

Total annual carrying cost is computed by multiplying the annual per-unit carrying cost (C_c ) times the average inventory level, determined by Q/2.

The total annual inventory cost is the sum of the ordering and carrying costs

The optimal order quantity occurs at

Annual Demand = D = 45 weeks * 10 pizzas a week= 450 pizzas a year

Ordering Cost = C_O= $15

Holding Cost = C_c = $0.40

$\fn_jvn Q_{opt} = \sqrt{\frac{2*450*15}{0.40}}$

  $\fn_jvn =\sqrt{33750} =183.711731 \approx 184$