The Warren W. Fisher Computer Corporation purchases 8,000 transistors each year as components in minicomputers. The unit cost of each transistor is $10, and the cost of carrying one transistor in inventory for a year is $3. Ordering cost is $30 per order. What are (a) the optimal order quantity, (b) the expected number of orders placed each year, and (c) the expected time between orders? Assume that Fisher operates on a 200-day working year.
Question 12.SP.2: The Warren W. Fisher Computer Corporation purchases 8,000 tr...
a) Q^* = \sqrt{\frac{2DS}{H}} = \sqrt{\frac{2(8,000)(30)}{3}} = 400 units
b) N = \frac{D}{Q^*} = \frac{8,000}{400} = 20 orders
c) Time between orders = T = \frac{Number of working days}{N} = \frac{200}{20} = 10 working days
With 20 orders placed each year, an order for 400 transistors is placed every 10 working days.
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