Question - The unit cost of an engine is $3000 and there is a 30% interest rate associated with the holding cost. It takes 6 weeks for a replenishment order to be placed. Every time the facility has to setup to make these engines the manager estimates a setup cost of around $250,000. The cost of back orders is about $150,000 per year.
|
Jan
|
Feb
|
March
|
April
|
May
|
June
|
July
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
|
240
|
150
|
350
|
297
|
497
|
566
|
200
|
450
|
300
|
240
|
300
|
350
|
What is the annual demand of engines?