A manufacturer has a production facility that requires 18,515 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 13 days. The unit purchase cost is $22.4 per unit. The cost to place and process an order from the supplier is $137 per order. The unit inventory carrying cost per year is 12.1 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. If the manufacturer uses a constant order quantity of 2,716 units per order, what is the annual inventory cost? Use at least 4 decimal places.

A manufacturer has a production facility that requires 18,515 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 13 days. The unit purchase cost is $22.4 per unit. The cost to place and process an order from the supplier is $137 per order. The unit inventory carrying cost per year is 12.1 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. If the manufacturer uses a constant order quantity of 2,716 units per order, what is the annual inventory cost? Use at least 4 decimal places.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

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