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This document discusses ordering parts from a supplier for a machine shop. It provides the annual demand, costs, and holding costs for hex nuts and molly screws. The optimal order quantities and times are calculated separately for hex nuts (4,000 pieces every 2.4 months) and molly screws (3,346 pieces every 2.86 months). The total annual holding and setup costs are $918.32 when ordered separately. When ordered together using the combined annual demand, the optimal order quantity is 5,215 pieces with a holding cost of $651.92 and setup cost of $651.92. Ordering the parts simultaneously is cheaper than ordering them separately.

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Selinnur Gökler
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Download as PDF, TXT or read online on Scribd
506 views

PDF

This document discusses ordering parts from a supplier for a machine shop. It provides the annual demand, costs, and holding costs for hex nuts and molly screws. The optimal order quantities and times are calculated separately for hex nuts (4,000 pieces every 2.4 months) and molly screws (3,346 pieces every 2.86 months). The total annual holding and setup costs are $918.32 when ordered separately. When ordered together using the combined annual demand, the optimal order quantity is 5,215 pieces with a holding cost of $651.92 and setup cost of $651.92. Ordering the parts simultaneously is cheaper than ordering them separately.

Uploaded by

Selinnur Gökler
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem 4.14 A local machine shop buys hex nuts and molly screw from the same supplier.

The hex
nuts cost 15 cents each and the molly screw cost 38 cents each. A setup cost of $100 is assumed for
all orders. Holding cost are based on a 25 percent annual interest rate. The shop uses an average of
20.000 hex nut and 14.000 molly screws annually.
a. Determine the optimal size of the orders of hex nuts and molly screws, and the optimal time
between placements of orders of these two items.
Answer:
First Scheme: If these item are ordered separately
- Hex nut price = 15 cents
- Molly Screws = 38 cents
- Setup cost (K) = $100
- Holding cost (h) =25% annual interest rate

2. 𝐾. 𝜆
𝑄= √
ℎ

Q is known as the economic order quantity

Part A: Hex nut


Optimal size
- Annual demand, λ =20.000 pcs/year
- Holding cost, h = $100
- Annual interes rate = 25%
2.100.20.000
𝑄= √
0.25

= 𝟒. 𝟎𝟎𝟎 𝒑𝒊𝒆𝒄𝒆𝒔
Optimal Time
𝑄
𝑇=
𝜆
4.000
=
20.000
= 𝟎, 𝟐 𝒀𝒆𝒂𝒓𝒔
= 𝟐, 𝟒 𝑴𝒐𝒏𝒕𝒉𝒔
Average Annual Holding Cost,
𝑄
= ℎ( )
2
4.000
= 0,25 ( )
2
= $500
Average annual setup cost,
𝐾. 𝜆
=
𝑄
100 × 20.000
=
4.000
= $500
Part B :Molly Screws
Optimal size
- Annual demand, λ =14.000 pcs/year
- Holding cost, h = $100
- Annual interest rate = 25%
2.100.14.000
𝑄= √
0.25

= 3.346,6 𝑝𝑖𝑒𝑐𝑒𝑠
Optimal Time
𝑄
𝑇=
𝜆
3.346,6
=
14.000
= 0,24 𝑌𝑒𝑎𝑟𝑠
= 2,86 𝑀𝑜𝑛𝑡ℎ𝑠
Average Annual Holding Cost,
𝑄
= ℎ( )
2
3.346.6
= 0,25 ( )
2
= $𝟑𝟏𝟖, 𝟑𝟐
Average annual setup cost,
𝐾. 𝜆
=
𝑄
100 × 14.000
=
3346,6
= $𝟒𝟏𝟖, 𝟑𝟐
b. If both item are ordered and receive simultaneously, compare to the problem above.
Answer:
Optimal size
a. Annual demand, λ =20.000 + 14.000 pcs/year
b. Holding cost, h = $100
c. Annual interest rate = 25%
2.100.34.000
𝑄= √
0.25

= 5215,36 𝑝𝑖𝑒𝑐𝑒𝑠
Average Annual Holding Cost,
𝑄
= ℎ( )
2
5215,36
= 0,25 ( )
2
= $651,92
Average annual setup cost,
𝐾. 𝜆
=
𝑄
100 × 34.000
=
5.215,36
= $651,92
Comparison of separately and simultaneously orders cost:
Annual cost of holding
Separately order = $500+$418,32 = $918,32
Simultaneously order = $651

Annual cost of setup


Separately order = $500+$418,32 = $918,32
Simultaneously order = $651
From result above we can conclude that order the material simultaneously of nut and
screw give us more cheap solution than order separately.

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