Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Zoe manages the inventory of electronic gadgets at TechHub, a technology retail company in Silicon Valley. The weekly demand for gadgets is constant and equals
Zoe manages the inventory of electronic gadgets at TechHub, a technology retail company in Silicon Valley. The weekly demand for gadgets is constant and equals 1000 units per day. The cost of storing gadgets in the warehouse is $0.10 per unit per month. There is a security guard who works 24 hours a day in shifts of 8 hours and is paid $18 per hour. The gadget supplier charges TechHub $2 per gadget ordered. The supplier is located in a technology hub in California, and it takes 3 days for a shipment to arrive once the order is placed. There is a fixed order processing fee of $200. When a shipment arrives, a full-time worker unloads the gadgets, which takes an hour. The firm's cost of capital is 5% per week. Assume 5 days a week, 4 weeks per month. List the values for the relevant parameters for the Economic Order Quantity (EOQ) model, namely, the demand rate (D), the unit purchasing cost (P), the setup cost (K), the cost of capital (I), the inventory holding cost (h), and the lead time (L)
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