Exercise 4
A rice exporter buys rice from the only supplier. The demand of rice is certain throughout the year. Last year, the exporter exported 1,000 tons of rice. Ordering cost is $150 per order. The annual holding cost is 10% of the purchase cost. The exporter pays $500 per ton to the supplier.
a. What should the economic order quantity be?
b. What is the total annual holding cost?
c. What is the total annual ordering cost?
Exercise 5
Company X ordered spare parts to company Y. Forecasts based on historical data indicate that company X will need to purchase 650,000 units of the special security chip annually. Company Y has a minimum order quantity of 10,000 units, and offers a sliding price scale based on the quantity in each order, as order quantity of 1,000 units, and offers as follows
Order quantity
|
Unit price
|
1,000 – 9,999
|
$3.35
|
10,000 – 29,999
|
$3.2
|
30,000 +
|
$3.15
|
The purchasing department of company X indicates that this company has to pay $200 for each order places and this company has an annual inventory carrying cost equals to 10% of the value of inventory. What is the economic order quantity?
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