Jason Walthour College student ID 305059
QAT Activity 3
Buy size for Company A.
To obtain the order size for Firm A you may use the monetary order quantity model. This will likely give the smallest total price to the business. First it is advisable to find the holding price. To find the having cost you increase the annual holding price rate by the unit cost of the item (Ch=IC). In this model the total annual holding expense rate is usually 3% as well as the unit value is $500 (Ch=3%X$500 or Ch=$15). Now that you have the holding hit you up for can find the optimal order size. To find the maximum order size you take the square root of 2 times the necessity times the ordering expense divided by the holding price. Q*= the square reason for 2(D)(Co)/Ch or perhaps Q*= the square root of 2(400, 000)(42)/15. When you complete this formula you acquire 1, 496. 66. Because you can not produce a partial laptop computer you need to round up. Thus giving you 1, 497 laptops as the optimal purchasing size.
M. Lot size for Company B.
To find the whole lot size intended for Company W you need to use the economic production lot size model. 1st you need to find the possessing cost. To get the holding cost multiply the annual holding cost level by the device cost of the product (Ch=IC). Through this example the annual keeping cost price is 4% and the product cost is $250 (Ch=4%X$250 or perhaps Ch=$10). Since you have the keeping cost you will find the optimal lot size To find the optimal great deal size you take the sq . root of twice the demand occasions the create cost break down by the keeping cost instances 1 less demand in the production. Q* = the square root of 2(D)(Cs)/Ch(1-D/p) or perhaps Q*= the square reason for 2(5, two hundred, 000)($500)/$10(1-5, two hundred, 000/88, 500, 000). When you complete this kind of equation you get 23, 505. 318547065042. Because you can not create a part lot it is advisable to round up. This provides you twenty-three, 506 while the optimal lot size.