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Question 3

A company stocks four items with the following characteristics.

Item	Demand (units/yr)	Unit Cost	Holding Cost ($/unit-yr)	Reorder Cost ($/order)	Space Used (m3/unit)
A	500	$200	35	80	4
B	300	$100	20	100	3
C	200	$300	45	120	6
D	400	$200	40	80	5

(Part a-f)

a)If the space is limited to 280m³, what additional cost should be assigned per cubic meter space?

Group of answer choices

$6.18

$7.26

$8.67

$9.54

None of them

b)If the space is limited to 280m³, what is the total annual variable cost (reordering cost plus holding cost) of this policy?

Group of answer choices

$6,091.10

$5,838.46

$6,020.11

$6,345.63

None of them

c)If the space is limited to 280m³, what is the optimal ordering quantity for item A?

Group of answer choices

36.60

47.81

32.66

41.26

None of them

d)If the company wants to limit average investment in these items to $12,500 (without limitation on space), what is the optimal ordering quantity for item B?

Group of answer choices

46.91

54.77

35.83

47.81

None of them

e)If the company wants to limit average investment in these items to $12,500 (without limitation on space), what is the optimal ordering quantity for item C?

Group of answer choices

20.98

32.66

35.83

47.81

None of them

f)If the company wants to limit average investment in these items to $12,500 (without limitation on space), what is the total annual variable cost of this policy?

Group of answer choices

$6,087.46

$5,838.46

$5,916.80

None of them

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