Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sam's Job Shop buys one part- Tegdiws for use in its production system. The parts are needed throughout the entire 365-day year. Tegdiws are used
Sam's Job Shop buys one part- Tegdiws for use in its production system. The parts are needed throughout the entire 365-day year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining quantity drops to the reorder level. Data for the product is as follows: Annual demand: 8,000 Item cost: $10.00 Setup or order cost: $120.00 Holding cost (% of item cost): 20% Lead time: 21 days Standard deviation of daily demand: 10 Service level: 99% (a) Determine the economic order quantity (EOQ) and reorder point. (Round the answer to integer) (8 points) (b) Calculate the annual holding and ordering costs respectively. (Round the answer to two decimals) (4 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started