1. Wang Distributors has an annual demand for an airport metal detector of 1,400 units. The cost of a typical detector to Wang is $400. Carrying cost is estimated to be 20% of the unit cost, and the ordering cost is $25 per order. If Ping Wang, the owner, orders in quantities of 300 or more, he can get a 5% discount on the cost of the detectors. Should Wang take the quantity discount?

2. Rodovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $50. The cost of each light is $1. The holding cost is $0.10 per light per year.

a) What is the optimal size of the production run?

b) What is the average holding cost per year?

c) What is the average setup cost per year?

d) What is the total cost per year, including the cost of the lights?

3. A) Briefly describe the features of a production order Quantity model.

b) Briefly describe the features of an economic order Quantity model.

c) Explain the differences between the EOQ and POQ models.

4. A. Verify if this is an optimal solution.

B. Cost of the above solution?

5. Drew Rosen Corp. is considering adding a fourth plant to its three existing facilities in Decatur, Minneapolis, and Carbondale. Both St. Louis and East St. Louis are being considered. Evaluating only the transportation costs per units as shown in the table, decide which site is best.