# Calculate the annual holding cost plus the annual ordering cost to get the total

1. The current order quantity for Paul’s Pasta Pinwheels is 200 boxes.

The order cost is \$4 per order, the holding cost is \$.40 per box per year, and

the annual demand is 500 boxes per year.

a.

Calculate the annual holding cost plus the annual ordering cost to get the

total costs when using an order quantity of 200 boxes.

b.

Calculate the EOQ and the total annual cost for this order quantity.

3.

Hottenstien, Giffith, and Hult, attorneys at law, do a great deal of printing.

The firm uses a single type of printer with annual demand for print cartridges

of 480 per year. The order cost is \$15 per order, and the carrying cost is20

percent per cartridge per year of the purchase cost of \$35 per cartridge.

a. How many print cartridges should the firm order at one time?

b. What is the time between orders?

4. Burgerama requires all employees who handle food to wear latex gloves for sanitary

reasons. The annual demand for the gloves is 250 boxes of 200 per year. The

order cost is \$11 per order, and the carrying cost is 25 percent per box per

year of the purchase cost of \$20 per Box.

a. How many boxes of gloves should Burgerama order at a time?

b. What is the time between orders?

c. What would be the change in annual cost if

Burgerama had storage space for only 15 boxes per order and thus was forced to

use an order of 15?

5. Office Express sells office suppliers to

businesses on a membership basis–i.e., walk-in customers without a membership

are not allowed. The company delivers supplies directly to the purchaser as

long as minimum purchase of \$100 is made. In order to encourage bulk orders, Office

Express offers the following discount schedule on purchase quantities of boxes

of paper. Larry’s lumber has an annual demand of 5,000 boxes of paper, a setup

cost of \$10 per order, and a holding cost of 22 percent of the purchase price.

Calculate the optimal order quantity.

1-100 boxes \$5 per box

100-249 boxes \$4.75 per box

250-499 boxes \$4.50 per box

500 or more \$4.25 per box

6. A watch repair shop buys batteries for a variety of products. The most frequent battery purchase is for a Y300, with demand of 3,000 per year. the order cost is \$15 per order, and the holding cost is \$0.50

per battery. Given the following price schedule, calculate the optimal order quantity.

Number of Batteries Price

1-250 \$6.00

250-499 \$5.50

500-999 \$5.00

1,000 or more \$4.75

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