Assume that JAO, Inc., a manufacturer of electronic test equipment, uses 14,400 units of an item annually. Its order cost is P500 per order, and the carrying cost is P10 per unit per year. It requires 10 days to place and receive an order. 1. The ordering costs is 5,696 4,026 6,000 4,800 2. The inventory costs is 6,000 12,000 9,600 8,052

Assume that JAO, Inc., a manufacturer of electronic test equipment, uses 14,400 units of an item annually. Its order cost is P500 per order, and the carrying cost is P10 per unit per year. It requires 10 days to place and receive an order. 1. The ordering costs is 5,696 4,026 6,000 4,800 2. The inventory costs is 6,000 12,000 9,600 8,052

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

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
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Hayes Electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters: (a) Both ordering cost and carrying cost are 10% less than originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.
Rafiki Bar uses 10,000 cases of millet beer monthly. One case costs Shs.5,000. Holding cost is 30% of the cost of a case p.a while ordering cost is Shs.100,000 per order. The firm works 360 days in a year while lead time is 6 days. Required: ii. Determine the days between orders and the reorder point iii. Determine the total cost of the inventory policy iv. Suppose actual holding cost turns out to be 15% instead of 30% and the inventory policy above is implemented for a year, determine the cost of prediction error if every other parameter estimate turns out as predicted.
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The sales of a popular mouthwash at Merkle Pharmacies over the past 6 months have averaged 1,800 cases per month resulting in 21,600 cases per month, which is the current order quantity. Merkle’s cost is $14.00 per case. The company estimates its cost of capital to be 10 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 5 percent of item cost. Thus, the annual inventory-holding costs are estimated to be 15 percent of item cost. The cost of placing an order is estimated to be $36.00 per order regardless of the quantity requested in the order. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. 1. What is the minimum-cost economic order quantity? Round your answer to the nearest whole number. fill in the blank 2 cases 2. What is the annual ordering cost based on the minimum-cost economic order quantity? Use the rounded EOQ value in your…