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Total cost=(Q/2)*H+ (D/Q)*S Equation 1. Where Q: Order quantity, H: Holding cost, D: Annual demand, S: Setup cost a) Considering the Equation 1, fill in
Total cost=(Q/2)*H+ (D/Q)*S Equation 1. Where Q: Order quantity, H: Holding cost, D: Annual demand, S: Setup cost a) Considering the Equation 1, fill in the table below (10%) Demand (D) = 1000 units per year, holding cost (H)=$1 per item per year, Setup cost (S)=$20 per order Order quantity Average inventory Holding cost No. of orders* Setup cost Total cost 50 25 400 425 100 50 200 250 150 75 133.3 208.3 200 100 100 200 250 125 4 205 300 150 3.3 216.7 350 175 2.9 232.1 400 200 2.5 250 Note: * Round up to one decimal point b) Discuss the changes in the holding cost, the setup cost and the total cost in the above table in relation to order quantity (10%). c) A computer manufacturer needs to decide how many mice to order at a time from its supplier. The produce two models of computer, each of which currently requires a different mouse. For each computer model: they use 10,000 mice per year, the holding cost per unit per year is KW 5,000 and they pay KW 10,000 to receive a delivery which takes 2 days. C-1) What is the optimal ordering quantity for one type of mouse? (5%) C-2) What is the total number of orders per year for one type of mouse? (5%) C-3) What is the total cost for one type of mouse? (5%)
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