solution

An electronic component manufacturer produces supercapacitors. They are sold at a steady rate of 60 per week. The capacitors cost the manufacturer $200 each. It costs the distributor $1200 to initiate an order, and holding costs are based on an annual interest rate of 30 %.

a. Determine
i. the optimal number of capacitors for the distributor to purchase,
ii. the time between the placement of orders,
iii. the yearly holding cost for this item,
iv. the yearly setup cost for this item and
v. the yearly purchase cost for this item.
b. Due to the pandemic, the lead time for order delivery has increased. What standing order size should the distributor set, if the lead time is:
i. 2 months,
ii. 18 months?

 
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