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cars ovens is a supplier of industrial ovens for two states.

Cars ovens is a supplier of industrial ovens for two states. it sells 1000 ABC model ovens every year during a 50 week year.

supplier price schedule is

0-69 units = $1200
70 + units =$1000

every oven shipped to cars masures 100 cubic feet.

lead time for the ovens is 2 weeks

Cars new whare house can hold 20000 cubic feet of ovens

cars ordering cost is $300 per order and the annual carring cost is estimated to ne 15% of the oven cost. assume demand is constant throughout the year.

a) what quanity shuld Cars order each time to minimize his cost?

b) What would be the ROP under the pricing sstem?

c) how many orders would Cars place per year in this system?

d) alternative ovens an alternate supplier is willing to build Cars ovens to the same configeration at a cost of $950 but must order th ovens n quanties of 150. Assuing the ovens are equilvent in all matters that price, is ti advantageous for him to buy from this alternate supplier?

Solution Preview

Answer.
Given in question.
Annual Demand (D) = 1000 Ovens
Ordering Cost (Cc)= $300 per order
Carrying cost (C0) = 15% of Over cost
supplier price schedule is
0-69 units = $1200
70 + units =$1000
every oven shipped to cars masures 100 cubic feet.
lead time for the ovens is 2 weeks
Cars new whare house can hold 20000 cubic feet of ovens

(1) Economic Order Quantity (EOQ) = underroot of (2* ...

Solution Summary

This solution is comprised of a detailed explanation to answer what quanity shuld Cars order each time to minimize his cost.

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