Bulldogs Inc. expects to use 96,000 litters of paint annually costing P12 per litter. Inventory carrying cost is equal to 25% of the purchase price. The lead time for placing the order is 1 week, and Bulldogs Inc. holds 4,800 litters of paint as safety stock. The company’s usage of inventory is at a constant rate. If the company orders 4,000 litters of paint per order, what is the cost of carrying inventory?

Bulldogs Inc. expects to use 96,000 litters of paint annually costing P12 per litter. Inventory carrying cost is equal to 25% of the purchase price. The lead time for placing the order is 1 week, and Bulldogs Inc. holds 4,800 litters of paint as safety stock. The company’s usage of inventory is at a constant rate. If the company orders 4,000 litters of paint per order, what is the cost of carrying inventory?

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...

See similar textbooks

Similar questions

The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
Bulldogs Inc. expects to use 48,000 boxes of chocolate per year costing P12 per box. Inventory carrying cost is equal to 20% of the purchase price. The company uses its inventory at a constant rate. The lead time for placing the order is 3 days, and Bulldogs Co. holds 2,400 boxes of paint as safety stock. If the company orders 2,000 boxes of chocolate per order, what is the cost of carrying inventory? A. P8,160 B. P5,280 C. P5,760 D. P2,400
Enrun Corporation expects to order 140,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $20; and the firm’s inventory carrying costs is equal to 20 percent of the purchase price. (Assume a 360-day year.) What is the economic ordering quantity for chips? If Enrun holds a safety stock equal to a 30-day supply of chips, what is its average inventory level? Assume that Enrun holds a safety stock equal to a 30-day supply of chips. What is the maximum amount of inventory that Enrun will have on hand at any time, that is, what will be the inventory level right after a delivery is made?
A local gas station is open 7 days per week, 365 days per year. Sales of 10W40 grade premium oil average 10 cans per day with a standard deviation of 4 canes. Inventory holding costs are 1.5$ per can per year. Ordering cost is $20 per order. Lead time is 8 days. In case of stockout, the motorist drives away and the sale is lost. So, the service station requires a service level of 95 %. If the station uses a fixed-quantity inventory management system, what would be the order quantity, the safety stock and the reorder level? If the station uses a fixed-review-period management system with 28 days review interval, what would be the order quantity if the inventory level is 55 cans at the moment of ordering?
The annual demand for sugar at a local soft drink company is normally distributed with a mean of 800 tons and a standard deviation of 25 tons. The sugar sells for OMR 500 each ton, and the annual inventory holding cost rate is 10%. Ordering costs are OMR5 per order. The delivery time for sugar is 5 working days. Assume that there are 250 working days in a year. 1) Evaluate the fill rate B for a safety stock of 5 tons. 2) What is the expected number of units short per year? 3) Compare the level of safety stock for each policy a=B=0.95.
Items purchased from a vendor cost $250 each, and the forecast for next year’s demand is 2,000 units. The optimal order size is 100. The firm operates 52 weeks next year and lead time is 3 weeks. It costs $5 every time an order is placed for more units, and the storage cost is $2 per unit per year. What is the total ordering cost for a year? a.100 b.50 c.250 d.500 e.300
Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. Mama Mia’s delivers on-average 225 pizzas each month (assume deterministic demand). Boxes cost 43 cents each, and each order costs $12.50 to process. Because of limited storage space, the manager wants to charge inventory holding at 25 percent of the cost. The lead time is seven days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine the economic order quantity, reorder point assuming no safety stock, number of orders per year, and total annual cost. Plot the cost curves and highlight the EOQ.
MamaMia's Pizza purchases its pizza delivery boxes from a printing supplier. MamaMia's delivers on average 300 pizzas each month (assume deterministic demand). Boxes cost 30 cents each, and each order costs $20 to process. Because of limited storage space, the manager wants to charge inventory holding at 40 percent of the cost. The lead time is 7 days, and the restaurant is open 360 days per year, assuming 30 days per month. Determine the economic order quantity.
Ann Chovies, owner of the Perfect Pasta Pizza Parlour, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and holding costs are 4 cents per pound per day. Lead time for each order is 3 days, and the pepperoni itself costs $3.00 per pound.If she were to order 80 pounds of pepperoni at a time, what would be the maximum inventory? Multiple Choice 50 100 200 20 80
Braneast Airlines uses 500 taillight per year. Each time an order for taillights is placed, an ordering cost of $ 5 is incurred. each light costs 0.40 $ , and the holding cost is 0.08 $ per unit per year. Assume that the demand occurs at a constant rate and shortages are not allowed. What is the EOQ?
The demand for a commodity is 40,000 units a year, at a steady rate. It costs $20 to place an order, and $0.40 to hold a unit for a year. Find the order size to minimize inventory costs, the number of orders placed each year, the length of the inventory cycle and the total costs of holding inventory for the year. What is the EOQ? What is the number of orders placed each year? What is the inventory cycle (length of time that the the order size will last)? in terms of weeks What is the total ordering & carrying costs at the EOQ level?
Items purchased from a vendor cost $250 each, and the forecast for next year’s demand is 2,000 units. The optimal order size is 100. The firm operates 52 weeks next year and lead time is 3 weeks. It costs $5 every time an order is placed for more units, and the storage cost is $4 per unit per year. What is the total storage (holding) cost for a year? a.500 b,100 c.300 d.250 e.200