Did I calculate these things right?

Cost to order = 48

Unit cost = 112

Units ordered per 365days=10752

Avg lead time = 8.2 w/ standard variation of 1.7 days

15 units per case

Patrachalski wants to order 32 cases at a time w/ no partial case orders

Ferguson wants to order 4 cases at a time

SMC cost to carry inventory = 32%

QUESTIONS:

1. What is the cost difference between Ferguson's proposal to order 4 cases each time

and Patrachalski's proposal to order 32 cases each time?

((112x10752)+(10752/60)48) + (60/2)35.84= 1213900.80

((112x10752)+(10752/480)48) + (480/2)35.84= 1213900.80

2. Lewin suggested looking at economic order quantity. Based on the lowest total annual

cost, what order quantity should Martin recommend?

EOQ = 170 Units

3. Let's explore the concept of "robustness." Lewin's proposal to use economic order

quantity may be unrealistic since SMC would like to place orders in whole cases. If the

order quantity is decreased to the nearest whole case (which is a 2.78% reduction)

what percent would your total annual cost change? What percent would your annual

total cost change if the order quantity is increased to the nearest whole case? Hint:

Use the formula ([New Total Cost / Old Total Cost] - 1 ).

0.04% = 165 Units = 11 Cases

a 2.78% reduction in the order quantity ((169.706/165)- 1).

Total annual cost increases from $6,082.25 to $6,084.65

4. What would the cost to place an order need to be for Davis to meet his inventory

reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales

by 9.6% (HINT: a 10% increase in sales of 100 units results in sales of 110 units).

Cost to place an order reduced from 48.00 to 36.35, annual demand should be increased from 10,752 units to 11,784.

Q=177.663.

Davis should reduce cost to place an order to 36.35

5. What would the cost to place an order need to be for Davis to meet his inventory

reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales

by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to

carry inventory from 32.0% to 29.4%.

Cost to place an order needs to be reduced to 33.39

If ICC is reduced to 29.4%: Q*=185.353

Davis should reduce the cost to place an order to 33.39

6. What would the cost to place an order need to be for Davis to meet his inventory

reduction objective if Vice President of Sales Steve Smith achieves his goal to increase sales

by 9.6% and Financial Comptroller Fred Ferguson achieves his goal of reducing the cost to

carry inventory from 32.0% to 29.4% and Purchasing Director Peter Patrachalski achieves

his goal of reducing the average cost per unit by 5.2% (HINT: a 10% reduction in a $10 unit

cost results in a $9 unit cost).

Cost to place an order needs to be reduced to 31.66.

If average cost per unit is reduced by 5.2%: Q*=190.365.

Davis should reduce the cost to place an order 31.66

7. What would the cost to place an order need to be if Davis implemented a just-in-time

approach so ordering 1 unit at a time is the optimal ordering quantity? Use the original

variables for part number 64-1909. Your answer must be accurate to six decimal places

(e.g. $47.123456)

1(35.84)/(2x10752) = .0016666667