Exercise #2 Tele-Reco is a new specialty store that sells television sets, videotape recorders, videogames, and other television-related products. A new Japanese-manufactured videotape recorder costs Tele-Reco $600 per unit. Tele-Reco’s annual holding cost rate is 22%. Ordering costs are estimated to be $70 per order. Given: Co=$600 a. I=22% Co=$70 If demand for the new videotape recorder is expected to be constant with a rate of 20 units per month, what is the recommended order quantity for the videotape recorder? D=20x12=240 π∗= π∗= 2 π₯ π· π₯ πΆπ πΆπ₯πΌ 2 π₯ 240 π₯ 70 600 π₯ .22 π ∗ = 254.54545 π ∗ = 15.95 ππ 16 π’πππ‘π b. What are the estimated annual inventory holding and ordering costs associated with this product? πππ‘ππ πΆππ π‘ = ππππππππ πΆππ π‘ + π»ππππππ πΆππ π‘ π· π₯ πΆπ π ∗ π₯ πΆβ πππππππ πΆππ π‘ = π»ππππππ πΆππ π‘ = π∗ 2 240 π₯ 70 πππ‘ππ πΆππ π‘ = = 1,050 16 16 π₯ 132 π»ππππππ πΆππ π‘ = 1,056 2 πππ‘ππ πΆππ π‘ = 1,050 + 1,056 πππ‘ππ πΆππ π‘ = $2,106 c. How many orders will be placed per year? ππ’ππππ ππ ππππππ πππ π¦πππ = π· ∗ π ππ’ππππ ππ ππππππ πππ π¦πππ = 240 16 ππ’ππππ ππ ππππππ πππ π¦πππ = 15 ππππππ d. With 230 working days per year, what is the cycle time for this product? πΆπ¦πππ ππππ = ππππ’ππ ππππππ‘πππ ππππππ π₯ π ∗ π· πΆπ¦πππ ππππ = 230 π₯ 16 240 πΆπ¦πππ ππππ = 15.33 ππ 15 π‘ππππ
