A manufacturer of hospital supplies has a uniform annual demand for 500,000 boxes of bandages. It costs $10 to store one box of bandages for one year and $250 to set up the plant for production. How many times a year should the company produce boxes of bandages in order to minimize the total storage and setup costs?

company can produce boxes 100 times per year.

Explanation:

Ordering cost per order, S = $250

Annual demand, D = 500,000

Holding or carrying cost per unit,  = $10

Economic order Quantity =

= =   = 5000

Optimal order quantity = 5000 boxes.

Number of times company can produce boxes =  Annual Demand/ Optimal order quantity =  500,000 / 5000 = 100  times

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; conceptual skills;