Author Question: A local furniture store is examining its inventory policy and considering using an economic order ... (Read 28 times)

luminitza · **on:** Jun 24, 2018

A local furniture store is examining its inventory policy and considering using an economic order quantity (EOQ) approach for a popular table set that they have had difficulty keeping in stock. They have the following information about the set: Annual demand = 5000 sets Current order quantity = 750 Carrying cost = 2.00/unit/year Order cost = 450
a. What is the current total annual cost?
b. What is the economic order quantity?
c. What is the total annual cost at the EOQ?

Question 2

The use of the relative frequency method to develop discrete probability distributions leads to what is called a
a. binomial discrete distribution.
b. empirical discrete distribution.
c. non-uniform discrete distribution.
d. uniform discrete distribution.

polinasid · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

a. TC = (750/2) 2 + (5 000/750) (450) = 750 + 3000 = 3750
b. EOQ = Sq Root of (2)(5000)(450)/2 = 1500
c. TC = (1500/2)(2) + (5000/1500)(450) = 1500 + 1500 = 3000

Answer to Question 2

b