# MgtOp 340 Final Exam Notes

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MgtOp 340 Final Exam Notes
MgtOp 340 Exam 2

EOQ
Suppose that JJ Inc. has a production rate of 250,000 units per year and a demand of 800 per day. JJ has a setup cost of \$40, and a holding cost percentage of 25%. JJ sells their product for \$50 and it costs them \$30 to produce it. If JJ works for 250 days per year, what is the optimal batch size? p=(250,000/250days)=1,000 P=250,000(production rate) d=800 D=(800*250days)=200,000 S=\$40 I=.25 c=\$30 H=(.25*30)=7.5 Optimal batch size => sqrt([2DS/H(1-d/p)] = 3266

Suppose that the annual EOQ cost (setup plus inventory holding) for a product stored in a warehouse is \$42,000. What would the total company EOQ cost be if the firm decided to equally allocate the demand among 25 warehouses instead of one?
*\$210,000

Consider the following all units’ quantity discount schedule and calculated EOQ’s.
Units Ordered
Price Per Unit
EOQ at that Price
0-499
\$134.00
520
500-1,499
\$122.00
1200
2,000-3,999
\$120.00
3400
4,000-5,999
\$116.00
3900
>=6,000
\$110.00
5000
The total annual costs of exactly which order quantities must be checked to determine the optimal solution?
*{3400,4000,6000}

Consider a company that uses a continuous review system. They currently have 0 units of inventory on have, an order of 500 schedule to arrive tomorrow, and 50 backorders. Assume that they have a 5-day protection interval, and the average daily demand is 100 units per units per day. If they hold 75 units of safety stock, how many should you order?
*The EOQ amount

You are the supplier of Hula-Hoops to Wal-Mart, and they are your only consumer. Wal-Mart uses its EOQ to determine that they should buy 2000 units from you each time they order. Given this information which of the following could not be an optimal order quantity for your company?
*15,000

No names:
2. A product for Simpson’s Stored has an annual demand of 72,000 units. The setup cost per order is \$75, and the annual holding cost percentage is 40%. The product is purchased for \$60 and

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