Question

Suppose that a distributor would like to design an optimal ordering quantity at an optimal time. Their demand is at a constant rate of 1000 units per week. In addition, any time they place an order, their supplier charges them a fixed fee of $500 and $20 per unit. It also costs them $5 per unit per week to store the product in inventory. Use this information to answer the questions 1-3. 1. What is the approximate amount of products the distributor should order? (a) 16 (b) 224 (c) 447 (d) 894 2. What is the optimal amount of time between ordering cycles? (a) Approximately every 3 days (b) Approximately every 7 days (c) Approximately every 2 weeks (d) Approximately every 5 weeks 3. If the distributor follows the optimal policy, what is the total weekly cost they should expect? (a) $21,453 (b) $22,236 (c) $31,457 (d) $51,266

Answer 1

AnGRven data, t 201unit Cost $5 unit per 2 looo 50o 5 t (b) Looo T. = o.uu7 x ㄱ dars T3 12 days Csl Scanned with CamScanner

T days c) Total cost 2 (223S s) 2.231 xSoo) 17.5) (1118-s) Cost + total est$2236 Scanned with CamScanner