Swf Case Study

1. With whom should Maddux place the order for the programs and how many should he order each time?

Answer:

D = 60000 * 5 * 2/3

= 200000

H = 0.5 * unit price

S quality printing = 100

S first printing = 100 + .9*(200) = 280

For quality printing

Q = √2DS / IP

Q1 = √2(200000)(100) / 0.5*5 = 4000

Q 2 = √2(200000)(100) / 0.5*1.80 = 6667

Q3 = √2(200000)(100) / 0.5*1.70 = 6860

Q4 = √2(200000)(100) / 0.5*1.60 = 7071

Q4 = √2(200000)(100) / 0.5*1.40 = 7559

Q1 = 6928

Q2 = 11547

Q3 = 30000

Q4 = 60000

Q5 = 250000

Annual Product cost = Demand * unit price

Annual order cost = Demand* setup cost/order quantity

Annual holding cost = Order quantity * holding cost / 2

Number | Unit Price | Order quantity | Annual Product cost | Annual order cost | Annual holding cost | Total |

1 | 5.00 | 4000 | 1000000 | 5000 | 5000 | 5000 |

2 | 1.80 | 10000 | 360000 | 2000 | 4500 | 366500 |

3 | 1.70 | 30000 | 340000 | 666.67 | 12750 | 353416.67 |

4 | 1.60 | 60000 | 320000 | 333.33 | 24000 | 344333.33 |

5 | 1.40 | 250000 | 280000 | 80 | 875000 | 367580 |

Order quanity of 60000 will minimize total cost to 344333.33

For first printing, Q = √2(200000)(280) / 0.5*5 = 6693

Total cost = Setup cost + holding cost + product cost

= 200000/6693 * 280 + 6693 / 2 * (0.5*5.00) + 6693*5

= 50198.20

So the order for the programs should be placed at quality printing as ordering quantity of 60000 each time

2. With whom should Maddux place the order for the inserts and how many should he order each time?

D = 60000

H = 0.5 * unit price

S quality printing = .5*100 = 50

S first printing = 0.5(100 + .9(200)) = 140

For quality printing

Q = √2DS / IP

Q1 = √2(60000)(50) / 0.5*2.5 = 12649

Q 2 = √2(60000)(50) / 0.5*.90 = 21082

Q3 = √2(60000)(500) / 0.5*.85 = 21693

Q4 = √2(60000)(50) / 0.5*.80 = 22361

Q4 = √2(60000)(50) / 0.5*.70 = 23905

Q1 = 6928

Q2 = 11547

Q3 = 30000

Q4 = 60000

Q5 = 250000

Annual Product cost = Demand * unit price

Annual order cost = Demand*...