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a 2 Cost Coefficients and Safety...

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Accounting

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a 2 Cost Coefficients and Safety Stock A supplier sells a popular auto part to car dealers. The weekly demand is approximately normal with the historical distribution of D~N (63,25) units over a 45-week operating year. Currently, the supplier pays $26 for each unit and sells each for $41. In addition, they estimate that the annual holding cost is 30 percent of the unit's cost (to the supplier). It costs approximately $25 to place an order (managerial and clerical costs). Assume a three-week lead time. What is the average annual demand X? a. 2,835 parts What is the order frequency (average number of orders placed per year) under the EOQ? O a. 21 orders per year Ob 25 orders per year c. 14 orders per year O d. 12 orders per year Clear my choice Suppose the order costs are expected to increase and the supplier now wishes to order 270 units at a time (instead of the EOQ derived in question 13). What is the unit ratio ? O a. 2 Ob. 4 Oc: 6 Od 8 Using your answer to the above question, what is the cost coefficient ratio (effect on cost) of ordering 7Q = 270 units instead of Q' units? a 1.25 Ob 2.13

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