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The Warren W. Fisher Computer Corporation purchases 8,000 transistors each year as components in computers. The unit cost of each transistor is $10 and the cost of carrying one transistor in inventory for a year is $3. Ordering cost is $30 per order.Assuming that Fisher operates on a 200-day working year, compute:a)The optimal order quantityb)The expected number of orders placed each yearc)The expected time between orders

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hoangkhangpham94

Answer:

a) 400 units;

b) 20 orders;

c) 10 days.

Explanation:

Please find the below for detailed calculations and explanation:

Denote D = Annual Demand = 8,000 units;

K = Orderding cost = $30;

h = Holding cost = $3.

a) We calculate the economic order quantity (EOQ) which is also the optimal order quantity, with the formula as below:

EOQ = Square ( 2*D*K/h) = Square(2*8,000*30/3) = 400 units.

b) Expected number of orders placed each year = Annual Demand / EOQ = 8,000/400 = 20 orders.

c) Expected time between orders = Number of working day per year / Number of orders placed each year = 200/20 = 10 days.

abiolataiwo2015

a. The optimal order quantity is 400 units.

b. The expected number of orders placed each year is 20 orders.

c. The expected time between orders is 10 days.

Economic order quantity (EOQ)

a. Economic order quantity (EOQ)

D = Annual Demand = 8,000 units

K = Ordering cost = $30

h = Holding cost = $3

EOQ = √( 2×D×K/h)

EOQ=√(2×8,000×30/3)

EOQ= 400 units

b. Expected number of order

Expected number of order = Annual Demand / EOQ

Expected number of order= 8,000/400

Expected number of order = 20 orders

c. Expected time between orders

Expected time between orders  = Number of working day per year / Number of orders placed each year

Expected time between orders  = 200/20

Expected time between orders = 10 days

Inconclusion the optimal order quantity is 400 units.

Learn more about Economic order quantity (EOQ) here:https://brainly.com/question/13386271

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