Discussion questions:
Q: 1
A fresh produce distributor uses 850 non-returnable packing crates a month, which it purchases at a cost of $6 each. The manager has assigned an annual holding cost of 28 percent of the purchase price per crate. Ordering cost is $25 per order. Currently the manager orders 850 crates at a time. How much could the firm save annually in ordering and holding costs by using the EOQ?
Q:2
A sausage factory can produce European wieners at a rate of 480 kg per day. It supplies wieners to local stores and restaurants at a steady rate of 110 kg per day. The cost to prepare the equipment for producing European wieners is $13. Annual holding cost is $2 per kg of wieners. The factory operates 300 days a year. Calculate: (Round the final answers to the nearest whole number.)
A. Optimal production run quantity. (Kg)
B. The number of production runs per year.runs/year
C. The length (in days) of a production run.(days)
Q:3
A manager must choose between two delivery alternatives: one-day freight and three-day freight. Using three-day freight would cost $140 less than using one-day freight for the shipment of 2,300 units. Another consideration is in-transit holding cost, which is $9 per unit per year. Assume 365 days per year. Which alternative would you recommend?
Three day freight or one day freight ?