6.10 A computer equipment has 4 outlets. Currently each outlet manages its ordering independently. Demand at each outlet averages 4,000 units per week. Each unit costs $200, and the company has holding cost of 20% per annum. The fixed cost of each order (administration plus transportation) is $900. Assume 50 weeks in a year

The company is considering centralizing purchasing ( for all 4 outlets), in ithis setting, the company would place a single order (for all outlets) with the supplier..

The supplier will deliver the order on a common truck to a transit point. Since individual requirements are identical across outlets, the total order would be split equally and shipped to the retailers from this transit point, T , and his entire operation would increase the fixed cost of placing an order to $1,800.

1. What is the annual demand for all 4 outlets (Units/year)?
2. What is the quantity that would minimize annual inventory cost under this proposed purchasing policy?
3. What would be the average inventory using this policy (Units)? 6.9 d) Now assume the ordering cost stays at $900. What is the quantity that would minimize annual inventory cost under this proposed purchasing policy? How does quadrupling the throughput (demand) affects the Economic Order Quantity? a)The EOQ is also quadruplet (EOQ is a function of R) b) The EOQ is halved (R is in the Numerator) c)The EOQ only doubles (R is under the square root) d) The EOQ does not change (it is not a function of R)