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ABC Corporation is a producer of subway trains. The firm operates 220 days a year and uses train wheels at a steady rate of 90
ABC Corporation is a producer of subway trains. The firm operates 220 days a year and uses train wheels at a steady rate of 90 per day. They purchase such wheels from nearby Summit Steel Corporation (SSC), for $2,000 each. Annual holding cost is $180 per wheel and ordering cost is $700 each time of order from shipping arrangement and specification agreement with the supplier. Once ABC places an order, it takes four days to receive ordered wheels from SSC. 1) Determine the optimum order size of wheels. 2) What is the total cost at the optimum order size? 3) If SSC delivers an order of EOQ today to ABC, how many days later, ABC should place an order to SSC? 4) Because SSC can produce 200 wheels a day, they plan to deliver 200 wheels each day to ABC until they fulfill all the order size, how much will this change the optimum order size and total cost
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