Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. HAL Ltd. uses disk drive housings at a rate of = 720 units per year. The cost of purchasing each housing is c
1. HAL Ltd. uses disk drive housings at a rate of = 720 units per year. The cost of purchasing each housing is c = $100 and the cost of initiating an order is K = $300. Assume an annual interest rate of I = 28 percent for determining the holding cost, and there is no order lead time. (a) Calculate the EOQ quantity Q and the corresponding maximum level of on-hand inventory H. (10 pts) (b) Now assume the disk drive housings are produced internally, instead of purchasing from an outsider supplier. The production rate is P = 1,440 units per year and the cost to initiate a production run is K = $300. All other information remains the same. For this finite production rate case, calculate the optimal quantity to produce in each cycle and the corresponding maximum level of on-hand inventory. (7 pts) (c) In (b), if the production rate P becomes infinite, how will your results change for the optimal order quantity Q and maximum on-hand inventory H? State your reason clearly. (3 pts)
Step by Step Solution
★★★★★
3.46 Rating (156 Votes )
There are 3 Steps involved in it
Step: 1
Lets tackle each part of the question step by step a Calculate the EOQ quantity Q and the corresponding maximum level of onhand inventory H Economic O...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