Question

Homework: Homework 8 (Module 12) Save Score: 1.5 of 3 pts 13 of 21 (21 complete) HW Score: 90.17%, 40.58 of 45 pt Problem 12.22 Question Help a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips? The optimal order quantity after the change in pricing structure is 200 units (enter your response as a whole number). The total annual cost for Bell computers to order purchase, and hold the integrated chips is S 1446256 (round your response to the nearest whole number). b) Bell Computers wishes to use a 10% holding cost rather than the fixed $34 holding cost in part a. What is the optimal order quantity, and what is the optimal annual cost? The optimal order quantity after the change in the holding cost calculation is units (enter your response as a whole number). The total annual cost for Bell computers to order, purchase, and hold the integrated chips is fround your response to the nearest whole number). Enter your answer in the edit fields and then click Check Answer Clen All Check Answer All parts showing TEAM 9 Type here to search DOLL 36 5 6 7 a E R T F K G

Answer 1

(a) EOQ = [ 2 x demand per annum x cost of ordering / cost of holding one unit epr year]^0.5

= [ 2 x 400x12 x 119/34]^0.5 =183.3 =183

now, the optimum quantity can either be 183 or the lowest quantity in the next bracket i.e. 200

Total cost with 183 units

cost of purchasing + cost of holding + cost f ordering

= 4800x 325 + 183/2 x 34+ 119x(4800/183) = 1560000+3111+3121.31 = 1566232.31

Total cost with 200 units

= 4800x300+200/2 x 34 + 119x (4800/200) = 1440000+3400+2856 =1446256

Therefore the economic quantity is 200 units.

EOQ with 10% holding cost = [ 2x400x12x119/32.5]^0.5 = 187

Still, the optimum order quantity will be 200 units as there is significant difference in the purchase cost.

Total cost = 4800x300+ 200/2 x 300x0.1+ 119x ( 4800/200) = 1440000+3000+2856 = 1445856