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Quiz 3

1. The optimal order quantity for WW Fisher Corp. to purchase transistors is 4,000 with 5 orders placed per year. 2. It is more cost effective for Whole Nature Foods to take advantage of the new supplier's quantity discount of 3,000 boxes per order. 3. The optimal lot size for the bicycle retailer to order from the manufacturer is 30,000 bicycles. With the temporary $25 per bicycle discount, the retailer should increase their lot size order to 33,000 bicycles.

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135 views

Quiz 3

1. The optimal order quantity for WW Fisher Corp. to purchase transistors is 4,000 with 5 orders placed per year. 2. It is more cost effective for Whole Nature Foods to take advantage of the new supplier's quantity discount of 3,000 boxes per order. 3. The optimal lot size for the bicycle retailer to order from the manufacturer is 30,000 bicycles. With the temporary $25 per bicycle discount, the retailer should increase their lot size order to 33,000 bicycles.

Uploaded by

Erika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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QUIZ 3

1. 1) WW Fisher Corp. purchases 8,000 transistors each year as components in


minicomputers. The unit cost of each transistor is $10, and inventory carrying cost is
$10 per transistor per year. Ordering cost is $30 per order. What are the optimal order
quantity (10pts) and expected number of orders placed each year? Assume Fisher
operates on a 200-day working year (10pts)

2)  Whole Nature Food sells a gluten-free product for which the annual demand is 5,000
boxes. At the moment, it is paying $6.40 for each box; carrying cost is 25% of the unit
cost; ordering costs are $25. A new supplier has offered to sell the same item for $6.00
if Whole Nature Foods buys at least 3,000 boxes per order. Should the firm stick with
the old supplier, or take advantage of the new quantity discount? Show your solution.
(25pts)

3)  A bicycle manufacturer sells each bicycle at $300 per unit. Annual demand at this
retail price turns out to be 100,000 bicycles. The costs of ordering, receiving, and
transportation for each lot of bicycles ordered is $3,000. The holding cost used by the
retailer is 17 percent. What is the optimal lot size that the retailer should order? (10pts)
The manufacturer has discounted its price by $25 for the short term (about the next two
weeks). The retailer has decided not to change the retail price but may change the lot
size ordered with the manufacturer because of the discount. How much is the lot size
increase (forward buy) because of the discount? (10pts)

4) A power plant in California uses coal at the rate of 1,000 pounds each day. The coal
comes from Chicago and costs $12 per pound, on average. Holding costs at the power
plant is 15%. Transportation choices available are as follows: 
Train: Lead time - 15 days; Carload (100,000 pounds) at $400 per carload, up to 5
carload
Large Truck: Lead time - 4 days; Up to 65,000 pounds for $2,600 per trip
Safety inventory is kept twice the daily consumption multiplied to the lead time of
supply. If inventory and transportation cost will be the basis for decision making,
what mode of transportation do you recommend and why? (35pts)

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