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  • Orders/year Order Size Processing Costs ($) Warehousing Costs ($) Sum of Processing and Warehousing Costs ($) 1 2,000 Free 2,000 2,000

    Diunggah oleh

    luxalive
    440 tayangan7 halaman
    - Low Nail Company needs to determine the optimal order quantity (EOQ) for kegs of nails considering various factors like order processing costs, warehousing costs, interest costs on inventory, and supplier discounts. - Initially, the EOQ is calculated as 345 kegs. When the supplier offers discounts, the EOQ reduces to 250 kegs. With changed warehousing costs, the EOQ increases to 500 kegs. - Taking all factors into account, the final EOQ that minimizes total costs is 250 kegs.

    Deskripsi Asli:

    Case 8

    Judul Asli

    CASE8

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    - Low Nail Company needs to determine the optimal order quantity (EOQ) for kegs of nails considering various factors like order processing costs, warehousing costs, interest costs on inventory, and supplier discounts. - Initially, the EOQ is calculated as 345 kegs. When the supplier offers discounts, the EOQ reduces to 250 kegs. With changed warehousing costs, the EOQ increases to 500 kegs. - Taking all factors into account, the final EOQ that minimizes total costs is 250 kegs.

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    © All Rights Reserved
    Unduh sebagai DOCX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    440 tayangan7 halaman

    Orders/year Order Size Processing Costs ($) Warehousing Costs ($) Sum of Processing and Warehousing Costs ($) 1 2,000 Free 2,000 2,000

    Diunggah oleh

    luxalive
    - Low Nail Company needs to determine the optimal order quantity (EOQ) for kegs of nails considering various factors like order processing costs, warehousing costs, interest costs on inventory, and supplier discounts. - Initially, the EOQ is calculated as 345 kegs. When the supplier offers discounts, the EOQ reduces to 250 kegs. With changed warehousing costs, the EOQ increases to 500 kegs. - Taking all factors into account, the final EOQ that minimizes total costs is 250 kegs.

    Hak Cipta:

    © All Rights Reserved
    Unduh sebagai DOCX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    dari 7

    PARTIV

    CASESOLUTIONS
    CASE91:LOWNAILCOMPANY
    Question1:UsingtheEOQmethodsoutlinedinchapter9,howmanykegsofnails
    shouldLoworderatonetime?
    TheEOQformulais:
    EOQ=2(annualuseinunits)(costofplacinganorder)/
    annualcarryingcostperitemperyear
    =2(2000)(60)/2
    =120,000
    =345kegsperorder
    Notethe2inthedenominator.Thatisbecause,onaverage,therentedwarehousespaceis
    onlyhalffull,which,makestheaveragewarehousingcostperkegbe$2.
    Question2:Assumeallconditionsinquestion1hold,exceptthatLowssuppliernow
    offersaquantitydiscountintheformofabsorbingallorpartofLowsorderprocessing
    costs.Forordersof750ormorekegsofnails,thesupplierwillabsorballtheorder
    processingcosts;forordersbetween249and749kegs,thesupplierwillabsorbhalf.
    WhatisLowsnewEOQ?(Itmightbeusefultolayoutallcostsintabularformforthis
    andlaterquestions.)

    Processingcosts
    ($)

    Warehousing
    costs($)

    Sumof
    processingand
    warehousing
    costs($)

    Orders/year

    Ordersize

    2,000

    Free

    2,000

    2,000

    1,000

    Free

    1,000

    1,000

    667

    90

    667

    757

    500

    120

    500

    620

    400

    150

    400

    550

    334

    180

    334

    514

    286

    210

    286

    496

    250

    240

    250

    490

    223

    540

    223

    743

    ThenewEOQ,basedontheaboveinformation,is250kegs.
    Question3:Temporarily,ignoreyourworkonquestion2.AssumethatLows
    warehouseofferstorentLowspaceonthebasisoftheaveragenumberofkegsLowwill
    haveinstock,ratherthanonthemaximumnumberofkegsLowwouldneedroomfor

    wheneveranewshipmentarrived.Thestoragecostperkegremainsthesame.Doesthis
    changetheanswertoQuestion1?Ifso,whatisthenewanswer?
    Therelevanttableisasfollows:

    Processingcosts
    ($)

    Warehousing
    costs($)

    Sumof
    processingand
    warehousing
    costs($)

    Orders/year

    Ordersize

    2,000

    60

    1,000

    1,060

    1,000

    120

    500

    620

    667

    180

    334

    524

    500

    240

    250

    490

    400

    300

    200

    500

    ThenewEOQ,basedontheaboveinformation,is500.
    Question4:Takeintoaccounttheanswertoquestion1andthesuppliersnewpolicy
    outlinedinquestion2andthewarehousesnewpolicyinquestion3.Thendetermine
    LowsnewEOQ.

    Therelevanttableisasfollows:

    Processingcosts
    ($)

    Warehousing
    costs($)

    Sumof
    processingand
    warehousing
    costs($)

    Orders/year

    Ordersize

    2,000

    Free

    1,000

    1,000

    1,000

    Free

    500

    500

    667

    90

    334

    424

    500

    120

    250

    370

    400

    150

    200

    350

    334

    180

    167

    347

    286

    210

    143

    353

    ThenewEOQ,basedontheaboveinformation,is334.
    Question5:Temporarily,ignoreyourworkonquestions2,3,and4.Lowsluckatthe
    racetrackisover;henowmustborrowmoneytofinancehisinventoryofnails.Looking
    atthesituationoutlinedinquestion1,assumethatthewholesalecostofnailsis$40per
    kegandthatLowmustpayinterestattherateof1.5%permonthontheunsoldinventory.
    WhatishisnewEOQ?
    Thisanswercanbedoneintabularformaswell,withtheinterestoninventoryappearing
    asanewcolumn.Ifoneorderisplacedayear,theaverageinventoryis1,000
    kegs,worth$40,000,withannualinterestcharges(1.5x12=18%)of$7,200.
    Otherinterestcostsarecalculatedinasimilarfashion,adjustedforaverage
    inventory.
    Therelevanttableisasfollows:

    Orders/year

    Ordersize

    Processing
    costs($)

    Warehousing
    costs($)

    Interestcosts
    ($)

    Sumof
    processing,
    warehousing,
    andinterest
    costs($)

    2,000

    60

    2,000

    7,200

    9,260

    1,000

    120

    1,000

    3,600

    4,720

    667

    180

    667

    2,405

    3,252

    500

    240

    500

    1,800

    2,540

    400

    300

    400

    1,440

    2,140

    334

    360

    334

    1,203

    1,897

    286

    420

    286

    1,030

    1,736

    250

    480

    250

    900

    1,630

    223

    540

    223

    807

    1,570

    10

    200

    600

    200

    720

    1,520

    11

    182

    660

    182

    656

    1,498

    12

    167

    720

    167

    605

    1,492

    13

    154

    780

    154

    555

    1,489

    14

    143

    840

    143

    519

    1,502

    ThenewEOQ,basedontheaboveinformation,is154kegs.
    Question6:Takingintoaccountallthefactorslistedinquestions1,2,3,and5,calculate
    LowsEOQforkegsofnails.
    Therelevanttableisasfollows:

    Orders/year
    1

    Ordersize
    2,000

    Processing
    costs($)
    Free

    Warehousing
    costs($)
    1,000

    Interestcosts
    ($)
    7,200

    Sumof
    processing,
    warehousing,
    andinterest
    costs($)
    8,200

    1,000

    Free

    500

    3,600

    4,100

    667

    90

    334

    2,405

    2,829

    500

    120

    250

    1,800

    2,170

    400

    150

    200

    1,440

    1,790

    334

    180

    167

    1,203

    1,550

    286

    210

    143

    1,030

    1,383

    250

    240

    125

    900

    1,265

    223

    540

    112

    807

    1,459

    Thenewanswer,basedontheaboveinformation,is250kegs.

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