Question
6)Best Buy sells three models of computer, the Litepro, the Medpro, and the Heavypro. Monthly demand for the three products are D L = 1050
6)Best Buy sells three models of computer, the Litepro, the Medpro, and the Heavypro. Monthly demand for the three products are DL = 1050 for Litepro, DM= 1200 units for the Medpro and DH = 600 units for the Heavypro. Each model costs Best Buy $500. A fixed transportation cost of $4,000 is incurred each time an order is delivered. For each model ordered and delivered on the same truck, an additional fixed cost of $1,000 per model is incurred for receiving and storage. Best Buy incurs a holding cost of 15 percent per year. If lots for each product are ordered and delivered independently, calculate the total annual ordering and holding cost (for the three products) of such a policy. Please show all calculation steps.
7)Reference to problem 6, mention two disadvantages of independent delivery.
8)What will be the ordering frequency if Best Buy decides to do joint delivery for problem 6?
9)Calculate the number of units of each product that must be in each order joint delivery order in problem 8.
10)If demand for Medpro in problem 6 is increased by a factor of 9 as a result of the advent of COVID-19, by what factor will the economic order quantity for Medpro increase?
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