Problem #1 Divan Incorporated sells preassembled furniture. Divan Inc buys module materials from its suppliers, who has now offered Divan a discount of $2 off all units if Divan will make a purchase greater than 500 or $5.00 off if the firm will make a purchase of at least 750 units. Current data for the company is: annual demand is 20,000 units per year; setup costs are $50, and I = 20% per year. Original price is $30 (e.g. if Divan purchases between 500 and 749, the price is $28, and if Divan purchases more than 750 units, the price is $25). (a) What is the optimal purchase quantity? (b) What are the annual product costs? (c) What are the annual setup costs? (d) What are the annual holding costs? (e) What is the annual total costs? ===== Problem #2 Hren Electronics is in process of setting a new office building. The following tables show the number of expected communications among the four departments and two possible layouts for considerations (tables 2 and 3 show the distance among the departments in the given layout). Calculate a total cost (or total distance traveled) for each layout and provide a recommendation that would minimize the total costs. Table 1. Number of transactions A B C D A 0 75 20 0 B 5 0 300 100 C 10 0 0 0 D 0 20 0 0 Table 2. Layout 1 (Walking distance in meters) A B C D A 0 10 20 30 B 10 0 10 20 C 20 10 0 10 D 30 20 10 0 Table 3 Layout 2 (Walking distance in meters) A B C D A 0 5 30 40 B 5 0 5 20 C 30 5 0 20 D 40 20 20 0

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Problem #1

Divan Incorporated sells preassembled furniture. Divan Inc buys module materials from its suppliers, who has now offered Divan a discount of $2 off all units if Divan will make a purchase greater than 500 or $5.00 off if the firm will make a purchase of at least 750 units. Current data for the company is: annual demand is 20,000 units per year; setup costs are $50, and I = 20% per year. Original price is $30 (e.g. if Divan purchases between 500 and 749, the price is $28, and if Divan purchases more than 750 units, the price is $25).

(a) What is the optimal purchase quantity?

(b) What are the annual product costs?

(d) What are the annual holding costs?

(e) What is the annual total costs?

=====

Problem #2

Hren Electronics is in process of setting a new office building. The following tables show the number of expected communications among the four departments and two possible layouts for considerations (tables 2 and 3 show the distance among the departments in the given layout). Calculate a total cost (or total distance traveled) for each layout and provide a recommendation that would minimize the total costs.

Table 1. Number of transactions
	A	B	C	D
A	0	75	20	0
B	5	0	300	100
C	10	0	0	0
D	0	20	0	0
Table 2. Layout 1 (Walking distance in meters)
	A	B	C	D
A	0	10	20	30
B	10	0	10	20
C	20	10	0	10
D	30	20	10	0
Table 3 Layout 2 (Walking distance in meters)
	A	B	C	D
A	0	5	30	40
B	5	0	5	20
C	30	5	0	20
D	40	20	20	0

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