a- What is the optimal order quantity and the optimal total ordering and holding cost? b.If the order quantity is 50% less than the optimal order quantity, what is the percentage of the additional holding and ordering cost incurred compared to the optimal cost of holding and ordering? c-If the order quantity is 50% more than the optimal order quantity, what is the percentage of the additional holding and ordering cost incurred compared to the optimal cost of holding and ordering?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
EOQ formula gives the order quantity that minimizes the total ordering and inventory holding cost. Although it may be thought that the simplifying assumptions of the EOQ model limits the applicability of this concept to a variety of cases, in practice, it provides satisfactory results. The reason for this is the robustness of the total cost function with respect to the choice of Q. In other words, if another order quantity is used instead of the optimal one, the overall effect of this choice on the total cost function is not that much. The objective of this question is to investigate the robustness of EOQ.
The purchase price of an electronic component is $100 per unit. The holding cost is calculated directly from the opportunity cost of the money tied up according to a market interest rate of 10% per year. The annual demand is 6000 units per year and the ordering cost is $12 per order.
a- What is the optimal order quantity and the optimal total ordering and holding cost?
b.If the order quantity is 50% less than the optimal order quantity, what is the percentage of the additional holding and ordering cost incurred compared to the optimal cost of holding and ordering?
c-If the order quantity is 50% more than the optimal order quantity, what is the percentage of the additional holding and ordering cost incurred compared to the optimal cost of holding and ordering?
d-In general, what would be the percentage of the additional holding and ordering cost compared to the optimal cost of holding and ordering if the order quantity is, say, k times the economic order quantity?
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