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Question 3 (10 points) A tire store expects to sell approximately 100 all-season tires of a certain make, model, and size next year. Annual holding

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Question 3 (10 points) A tire store expects to sell approximately 100 all-season tires of a certain make, model, and size next year. Annual holding cost is $16 per tire and ordering cost is $20 per order. The store operates 360 days a year and has enough storage space in the back. a) What is the EOQ? b) How many times per year would the store reorder if EOQ units are ordered each time? c) What is the length of time between each two shipments? Question 4 (10 points) HAL Ltd. produces a line of high-capacity disk drivers for mainframe computers. It can produce the disk drive housings at the rate of 150 housings per month. The housing cost 855 each to produce and the setup cost for beginning of a production run is 7005 . Assume the annual interest rate of 28% for determining the holding cost and the demand is 720 units per year. a) What is the optimal number of housing for HAL Lid. to produce in each production run? b) Find the time between initiation of production nuns, the time devoted to production and the downtime each production cycle. c) Calculate the maximum level of inventory in the warchouse in this case. Question 5 (15 points) Weekly demand for private label washing machines at Karstadt, a German department store chain, is normally distributed with a mean of 700 and a standard deviation of 320 . Karstadt currently has a supply source in China that delivers machines at a cost of 200 2 euros. The lead time required by the supplier is normally distributed with a mean of 5 weeks and a standard deviation of 2 weeks. A European supplier has offered to deliver washing machines with a guaranteed lead time of 1.5 weeks at a cost of 250 euros. Karstadt has a holding cost of 20 percent and targets a cyele service level of 94 percent. Should Karstadt accept the local supplier's offer in terms of annual total cost? (Hint: ealeulate the holding cost related to the safety inventory for each suppler separately, then calculate the annual purchasing cost for each supplier separately; finally compare the total cost for each supplier and choose the best option)

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