00:01
Hello everyone, so this is the question that we have.
00:04
There's uni essentials.
00:13
So part a talks about it has approximately 24 ,000 glass jars each month for the gourmetjams and jellies.
00:28
Now, due to some space constraints, they order 5 ,000.
00:34
Jars at a time now monthly holding cost holding cost of these jars is 0 .08 dollars per jar and the ordering cost is equal to $60 per jar now the company operates 20 days a month now, part first of the question talks about the replenishment policy, and part second talks about the suggestion that they would prefer order eight times a month but needs to justify any change in the order sites.
01:40
So how much would be the ordering cost to be reduced? ordering cost to be reduced.
01:55
Now, part b of the question talks about if they have the soberner calendars or the academic year, they sell the selling price of these calendars is $12 .95.
02:13
Cents and the purchasing cost or the ordering cost is five dollars each and the salvage the savage amount on each of the calendars and salvage value is estimated to be zero point zero five dollars per unsold calendars now we have to determine that how many calendars should be ordered to maximize the profits.
02:54
Now let's jump onto the solution of the question.
02:58
So if we take the current scenario into the picture.
03:02
So for part a, if we talk about the economic order quantity, economic order quantity, which i'll acronym 2, eoq, would be equal to twice the demand for random multiplied by the cost of ordering, cost ordering, when divided by the cost of holding one hundred, cost holding, to the power 0 .8, 5, or to the part 1 divided by 2.
03:56
So over here, if we put it in this equation, so this is going to be 2 multiplied by 24 ,000 jars, multiplied by 12, multiplied by 60, divided by 0 .08, multiplied by 12, for 12 months they are holding, to the par half, which comes out to be 6 ,000 jars.
04:18
Now, cost of holding 6 ,000 jars.
04:21
So cost of holding 6 ,000 jars is going to be 6 ,000 divided by 2 multiplied by 0 .08 so this is going to be 240 and cost of ordering is going to be equal to 60 multiplied by 24 ,000 divided by 6 .000 divided by 6 .000.
04:55
Which again comes up to be 240.
04:59
So total cost bare by the company.
05:01
So total cost is going to be 240 plus 240 which is 480...