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Assignment 4

Uploaded by

khloud.egemy
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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Nile University

IENG 306 Operations Management Fall 2018

Assignment # 4 (Due 30th, October 2017)

Chapter 13

4. A large law firm uses an average of 40 boxes of copier paper a day. The firm
operates 260 days a year. Storage and handling costs for the paper are $30 a year
per box, and it costs approximately $60 to order and receive a shipment of paper.
a. What order size would minimize the sum of annual ordering and carrying
costs?
b. Compute the total annual cost using your order size from part a,
c. Except for rounding, are annual ordering and carrying costs always equal at
the EOQ?
d. The office manager is currently using an order size of 200 boxes. The
partners of the firm expect the office to be managed “in a cost-efficient
manner.” Would you recommend that the office manager use the optimal
order size instead of 200 boxes? Justify your answer.

14. A mail-order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a
year, and ordering costs are $96. The following price schedule applies. Determine:
a. The optimal order quantity.
b. The number of orders per year.

15. A manufacturer of exercise equipment purchases the pulley section of the


equipment from a supplier who lists these prices: less than 1,000, $5 each; 1,000 to
3,999, $4.95 each; 4,000 to 5,999, $4.90 each; and 6,000 or more, $4.85 each.
Ordering costs are $50, annual carrying costs per unit are 40 percent of purchase
cost, and annual usage is 4,900 pulleys. Determine an order quantity that will
minimize total cost.
26. A small copy center uses five 500-sheet boxes of copy paper a week. Experience
suggests that usage can be well approximated by a normal distribution with a mean
of five boxes per week and a standard deviation of one-half box per week. Two
weeks are required to fill an order for letterhead stationery. Ordering cost is $2, and
annual holding cost is 20 cents per box.
a. Determine the economic order quantity, assuming a 52-week year.
b. If a fixed interval of seven weeks instead of an ROP is used for reordering,
what risk does the copy center incur that it will run out of stationery before
this order arrives if it orders 36 boxes when the amount on hand is 12
boxes?

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