Simple question [2 marks]

Cost per each trip (S) = $ 1,000

Demand for motorcycles (D) = 300 motorcycles/ day
Cost per engine = $ 500
Holding cost (h) = 20% ) $ 500( = $ 100
Assuming that company works 365 days a year, annual demand (D)
= 300(365) = 109,500
A-How many engines should Harley load onto each truck?

2∗D∗S 2(109,500)(1000)
EOQ=
√ H
=
√ 100
=1,479.8 engines

B- What is the cycle inventory of engines at Harley?

EOQ 1,479.8
cycle inventory= = = 739.9 engines
2 2

question in Lots Ordered and Delivered Jointly [3 marks]

A-Monthly demand for tablets and smartphones= 10,000 units

Yearly demand for tablets and smartphones (D)= 12*10,000

units=120000 units

Monthly demand for laptops = 4000 units

yearly demand for laptops =12*4000 units= 48000 units

Tablet cost (T) = 100$

Laptop cost (L)= 400$

Holding cost (H) = 25%

Fixed cost of each shipment (S) = 10,000 $

2∗D∗S
Optimum order size =
√ H∗COST
 2(120,000)(10,000)
For Foxconn : Optimum order size = 

9798 units
√ 0.25(100)
For Flextronics : Optimum order size
= 9797.958 =

2( 48,000)(10,000)
= 
√ 0.25(400)
= 3098.38= 3098 units

B-assembly with the same contract manufacturer (MIX)

Yearly order size(D) = 120000+48000= 168000

Fixed cost of shipment(S) = 10000 $

Holding cost(H)=25%

(10000∗100+4000∗400)
weighted average cost = = 185.71$
14000

2(168000)(10,000)
Optimum order size = 
√ 0.25(185.71)
=8507.01 units

yearly total order( D) 168000

Optimal order frequency = ¿= = 19.74 /year
optimum order ¿ Q ¿ 8507.01

9798 3098
C-Average inventory before combining (from A) = + = 6448 units
2 2

8507.01
Average inventory after combining = = 4253.50 units
2

Reduction in cycle inventory = 2194.5 units