QM 670: Operations Management and Optimization: Case Studies and Linear Programming Applications Exam II

A set of solved exam questions covering case studies and linear programming applications in operations management.

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QM 670 Exam II1.Kelvin Shoe Stores carries a basic black dress shoe for men that sells at a rate of 500 eachquarter. Their current policy is to order 500 per quarter, with a fixed cost of $30/order.The annual holding cost is 20% of the cost ofitems held. The following cost structure isapplicable:Order QuantityPrice/pair0-99$36100-19932200-29930300+28For a price of $36, the optimal order quantity is ___________.(4)SolutionEOQ = sqrt(2*(500*4)*30/(0.2*36)) = 129.09 = 130 unitsAs, for $36, only 0-99 can be ordered.So, EOQ is infeasible at this cost structure2.Redo #1 if they allow backordered items with a shortage cost of $4/quarter.Optimal order quantity = ___________. (4)SolutionIf backordered items with shortage cost of $4/quarter was there, the decision will not changeregarding optimal quantity.

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University

University of North Alabama

Course

QM 670

Subject

Statistics

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