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1) The two most important questions as an inventory manager is how much units to order and when to order. You are working as an Inventory Manager in a manufacturing company. You have forecasted that annual requirement of a part is 72,000 units. The order cost is $1000 per order, the holding rate is 20 percent and the part cost is $200 per unit. Your firm operates 360 days a year. The lead time is 06 days.                     Determine: Economic Order Quantity (EOQ) Annual holding cost Annual order cost, and Annual total inventory cost? Calculate the re order point.

1) The two most important questions as an inventory manager is how much units to order and when to order. You are working as an Inventory Manager in a manufacturing company. You have forecasted that annual requirement of a part is 72,000 units. The order cost is $1000 per order, the holding rate is 20 percent and the part cost is $200 per unit. Your firm operates 360 days a year. The lead time is 06 days.                     Determine: Economic Order Quantity (EOQ) Annual holding cost Annual order cost, and Annual total inventory cost? Calculate the re order point.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 6E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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1) The two most important questions as an inventory manager is how much units to order and when to order. You are working as an Inventory Manager in a manufacturing company. You have forecasted that annual requirement of a part is 72,000 units. The order cost is $1000 per order, the holding rate is 20 percent and the part cost is $200 per unit.

Your firm operates 360 days a year. The lead time is 06 days.                    

Determine:

  • Economic Order Quantity (EOQ)
  • Annual holding cost
  • Annual order cost, and
  • Annual total inventory cost?
  • Calculate the re order point.

 

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