Kris Lee, the owner and manager of the Quality Hardware Store, is reassessing his inventory policy for hammers. He sells an average of 50 hammers per month, so he has been placing an order to purchase 50 hammers from a wholesaler at a cost of $20 per hammer at the end of each month. However, Kris does all the ordering for the store himself and finds that this is taking a great deal of his time. He estimates that the value of his time spent in placing each order for hammers is $75. What would the unit holding cost for hammers need to be for Kris' current inventory policy to be optimal according to the basic EOQ model? What is this unit holding cost as a percentage of the unit acquisition cost? What is the optimal order quantity if the unit holding cost actually is 20 percent of the unit acquisition cost? What is the corresponding value of TVC? What is TVC for the current inventory policy? If the wholesaler typically delivers an order of hammers in 5 working days (out of 25 working days in an average month), what should the reorder point be (according to the basic EOQ model)? Kris doesn't like to incur inventory shortages of important items. Therefore, he has decided to add a safety stock of 5 hammers to safeguard against late deliveries and larger-than-usual sales. What is his new reorder point? How much does this safety stock add to TVC?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Kris Lee, the owner and manager of the Quality Hardware Store, is reassessing his inventory policy for hammers. He sells an average of 50 hammers per month, so he has been placing an order to purchase 50 hammers from a wholesaler at a cost of $20 per hammer at the end of each month. However, Kris does all the ordering for the store himself and finds that this is taking a great deal of his time. He estimates that the value of his time spent in placing each order for hammers is $75.
- What would the unit holding cost for hammers need to be for Kris' current inventory policy to be optimal according to the basic EOQ model? What is this unit holding cost as a percentage of the unit acquisition cost?
- What is the optimal order quantity if the unit holding cost actually is 20 percent of the unit acquisition cost? What is the corresponding value of TVC? What is TVC for the current inventory policy?
- If the wholesaler typically delivers an order of hammers in 5 working days (out of 25 working days in an average month), what should the reorder point be (according to the basic EOQ model)?
- Kris doesn't like to incur inventory shortages of important items. Therefore, he has decided to add a safety stock of 5 hammers to safeguard against late deliveries and larger-than-usual sales. What is his new reorder point? How much does this safety stock add to TVC?
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