A food manufacturing company orders raw material A, 1200 kg annually. The company estimates its annual storage and handling cost to be RM0.50 per kg per month. The administrative cost for placing and receiving an order is RM250.00. The company operates 310 days per year. The ordering lead time is 5 working days. Currently every two months the company will order 200 kg. The management wants to reduce the total inventory cost. Suggest how this can be achieved and determine when the order should be made. Show all calculations to one decimal point to support your suggestion

A food manufacturing company orders raw material A, 1200 kg annually. The company estimates its annual storage and handling cost to be RM0.50 per kg per month. The administrative cost for placing and receiving an order is RM250.00. The company operates 310 days per year. The ordering lead time is 5 working days. Currently every two months the company will order 200 kg. The management wants to reduce the total inventory cost. Suggest how this can be achieved and determine when the order should be made. Show all calculations to one decimal point to support your suggestion

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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