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Monday, January 24, 2011

MGT613 GDB Solution

Due date Monday, January 24, 2011

ABC Company deals in manufacturing Air Conditioners. For manufacturing purpose the company uses 824 compressors annually. Ordering costs are $14, carrying costs are $6 per compressor a year. According to price schedule orders less than 50 compressors will cost $15 per compressor, 50 to 79 compressors will cost $13 per compressor, 80 to 99 compressors will cost $11 per compressor and lager orders will cost $10 per compressor.

Determine the optimal order quantity and describe in which price range it will fall. Based on that price range also determine the total cost.





Solution
Given data

D=demand =824 annually
S=ordering cost =14 per compressor
H=carrying cost =6 per compressor


Range Price
1 – to - 49 RS 15
50 - to - 79 RS 13
80 - to - 99 RS 11
100 or more Rs 10

EOQ= under root (2DS/H)
EOQ=under root 23072 / 6
EOQ= under root 3845
EOQ= 62
TOTAL COST
TC= carrying cost + order cost +purchase cost
TC= 11084.06

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