SY Manufacturers (SYM) is producing T-shirts in three colors:red, blue, and white. The monthly demand for each color is 4,400units. Each shirt requires 0.80 pound of raw cotton that isimported from the Luft-Geshfet-Textile (LGT) Company in Brazil. Thepurchasing price per pound is $2.00 (paid only when the cottonarrives at SYM's facilities) and transportation cost by sea is$0.40 per pound. The traveling time from LGT’s facility in Brazilto the SYM facility in the United States is two weeks. The cost ofplacing a cotton order, by SYM, is $110 and the annual interestrate that SYM is facing is 15 percent of total cost per pound.
a. What is the optimal order quantity ofcotton? (Round your answer to the nearest wholenumber.)
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| | Optimal order quantity | | pounds |
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b. How frequently should the company ordercotton? (Round your answer to 2 decimalplaces.)
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| | Company orders once every | | months. |
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c. Assuming that the first order is needed on3-Jun, when should SYM place the order?
d. How many orders will SYM place during thenext year? (Round your answer to 2 decimalplaces.)
e. What is the resulting annual holding cost?(Round your answer to the nearest wholenumber.)
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| | Annual holding cost | | per year |
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f. What is the resulting annual orderingcost?
g. If the annual interest cost is only 5percent, how will it affect the annual number of orders, theoptimal batch size, and the average inventory?
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| | If the holding cost is lower the batchsize is | | thus, the average inventory is | | The number of orders would be |
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