Question

Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is units. Southeastern estimates its annual holding cost for this item to be ​$ per unit. The cost to place and process an order from the supplier is ​$. The company operates days per​ year, and the lead time to receive an order from the supplier is working days. ​a) What is the economic order​ quantity? nothing units ​(round your response to the nearest whole​ number).

Answer 1

Answer:

A. Economic order​ quantity= 319

B. Annual holding​ costs= 3,669

C. Annual ordering​ costs= 3,669

D. 154

Explanation:

a) Calculation for the economic order​ quantity

Using this formula

Economic order​ quantity=√2*Demand*Cost order/Annual holding cost

Let plug in the formula

Economic order​ quantity=√2*15,400*76/23

Economic order​ quantity=√2,340,800/23

Economic order​ quantity=√101,774

Economic order​ quantity= 319

b) Calculation for annual holding​ costs

Using this formula

Annual holding​ costs=Economic order​ quantity/2*Annual holding cost

Let plug in the formula

Annual holding​ costs=319/2*23

Annual holding​ costs= 3,669

c) Calculation for the annual ordering​ costs

Using this formula

Annual ordering​ costs=Demand/Economic order​ quantity*Cost order

Let plug in the formula

Annual ordering​ costs=15,400/319*76

Annual ordering​ costs= 3,669

d) Calculation for reorder​ point

Using this formula

Reorder point=Demand/Numbers of days the company operate per​ year*Lead time

Let plug in the formula

Reorder point=15,400/300 days per year*3

Reorder point= 154