CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Required: (PLEASE ANSWER 4 TO 7 ONLY) 4. Determine the number of orders. 5. How much is the total carrying cost? 6. How much is the total ordering cost? 7. How much is the total cost of inventory 8. What will be your advice to the management?
CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Required: (PLEASE ANSWER 4 TO 7 ONLY) 4. Determine the number of orders. 5. How much is the total carrying cost? 6. How much is the total ordering cost? 7. How much is the total cost of inventory 8. What will be your advice to the management?
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 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...
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CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
Required: (PLEASE ANSWER 4 TO 7 ONLY)
4. Determine the number of orders.
5. How much is the total carrying cost?
6. How much is the total ordering cost?
7. How much is the total cost of inventory
8. What will be your advice to the management?
Transcribed Image Text:CASE 5
Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of
$300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
Required:
1. Compute for the economic order quantity size.
2. Determine the reorder point.
3. Determine the average inventory balance.
4. Determine the number of orders.
5. How much is the total carrying cost?
6. How much is the total ordering cost?
7. How much is the total cost of inventorv
8. What will be your advice to the management?
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