1. The Figgis Agency uses 1200 packing crates a month, which it purchases at a cost of $8 each. The manager has assigned an annual carrying cost of 25% of the purchase price per crate. Ordering costs are $55. Currently, the manager orders once a month. How much could the firm save annually in ordering and carrying costs by using EOQ?
2. A team of Fisher alumni launched a company to sell an energizing drink that does not have caffeine nor taurine. They bought a bottling machine which is able to fill the bottles with a mean of 16.2 oz. and a standard deviation of 0.4 oz. The lower limit is 15.6 oz. and the upper limit is 16.6 oz. What is the capability index for the bottling process?
3. The operator of a concession at a downtown location estimates that he will sell 500 bags of circus peanuts during a year. Carrying costs are 10 percent of unit price and ordering cost is $25. The price schedule for bags of peanuts is: 1 to 199, $1.10 each; 200 to 499, $.95 each; and 500 or more $.85 each. What order size would be most economical?