Black Appliances Is Trying to Determine the Optimal Order Quantity

question 178

Multiple Choice

Black Appliances is trying to determine the optimal order quantity for dryers for the next twelve months.Annual sales are expected to be 1,000,000 units at a retail price of $400 each.The cost of carrying dryers is $80 per year.Studies show that it costs Black $250 to prepare and receive an order.What is the EOQ?

• A) 2,750
• B) 2,500
• C) 2,000
• D) 1,850

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Definitions:

Common Causes

These refer to the usual, expected reasons behind variation in process performance or quality control.

Quality Function Deployment

A systematic approach to design based on a company's effort to meet customer needs and product quality by translating customer desires into engineering characteristics for a product.

Customer Requirements

Explicit and implicit needs or expectations that customers have concerning a product, service, or experience.

Specifications

Detailed descriptions of the design, materials, and performance requirements for products or services.