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Operations Management
An automobile dealer expects to sell 729 cars a year. The cars cost $12,000 plus a fixed charge of $500 per delivery. If it costs $1000 to store a car for a year, find the order sizé ánd the number oi orders that minimize inventory costs. cars per order orders per year

An automobile dealer expects to sell 729 cars a year. The cars cost $12,000 plus a fixed charge of $500 per delivery. If it costs $1000 to store a car for a year, find the order sizé ánd the number oi orders that minimize inventory costs. cars per order orders per year

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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***.*... . An automobile dealer expects to sell 729 cars a year. The cars cost $12,000 plus a fixed charge of $500 per delivery. If it costs $1000 to store a car for a year, find the order size and the number of orders that minimize inventory costs. cars per order orders per year
Transcribed Image Text:***.*... . An automobile dealer expects to sell 729 cars a year. The cars cost $12,000 plus a fixed charge of $500 per delivery. If it costs $1000 to store a car for a year, find the order size and the number of orders that minimize inventory costs. cars per order orders per year
Expert Solution
Step 1 Introduction:

Here, given annual demand =729 cars, this number of cars are expected to be sold. The delivery charge for each order=500

The storing costs for a car for a year=1000

Here, I would determine the EOQ quantity that could minimize the total inventory costs. After determining the EOQ quantity, I would determine the number of orders per year.

 

 

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