Lebar Daun Sdn Bhd is planning to use the economic order quantity model to determine the optimal order levels of raw materials. Material Z is consumed evenly over the year and the current usage is 120,000 units. The material is purchased in boxes and each box contains 12 units of material Z, at a price of RM252 per box. A safety stock of 200 boxes is kept. The cost of placing and handling orders is estimated to be RM6,300, which is based cost incurred for similar orders that have already made. The cost of RM6,300 was for 30 orders. The inflation of 2 per cent should be added to the above ordering costs. Besides, the company estimates to be charged the transporation cost of RM15 per order. It should be assumed that ordering costs change in proportion to the number of orders place. Other costs which relate to material Z such as insurance, interest and space costs for a year, were calculated at 15 % of the purchase price.

Lebar Daun Sdn Bhd is planning to use the economic order quantity model to determine the optimal order levels of raw materials. Material Z is consumed evenly over the year and the current usage is 120,000 units. The material is purchased in boxes and each box contains 12 units of material Z, at a price of RM252 per box. A safety stock of 200 boxes is kept. The cost of placing and handling orders is estimated to be RM6,300, which is based cost incurred for similar orders that have already made. The cost of RM6,300 was for 30 orders. The inflation of 2 per cent should be added to the above ordering costs. Besides, the company estimates to be charged the transporation cost of RM15 per order. It should be assumed that ordering costs change in proportion to the number of orders place. Other costs which relate to material Z such as insurance, interest and space costs for a year, were calculated at 15 % of the purchase price.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter3: Introduction To Optimization Modeling

Section3.8: A Multiperiod Production Model

Problem 22P

See similar textbooks

Similar questions

Please solve this. Lebar Daun Sdn Bhd is planning to use the economic order quantity model to determine the optimal order levels of raw materials. Material Z is consumed evenly over the year and the current usage is 120,000 units. The material is purchased in boxes and each box contains 12 units of material Z, at a price of RM252 per box. A safety stock of 200 boxes is kept. The cost of placing and handling orders is estimated to be RM6,300, which is based cost incurred for similar orders that have already made. The cost of RM6,300 was for 30 orders. The inflation of 2 per cent should be added to the above ordering costs. Besides, the company estimates to be charged the transporation cost of RM15 per order. It should be assumed that ordering costs change in proportion to the number of orders place. Other costs which relate to material Z such as insurance, interest and space costs for a year, were calculated at 15 % of the purchase price. Required: a. Calculate the order quantity that…
Help need. management accounting Lebar Daun Sdn Bhd is planning to use the economic order quantity model to determine the optimal order levels of raw materials. Material Z is consumed evenly over the year and the current usage is 120,000 units. The material is purchased in boxes and each box contains 12 units of material Z, at a price of RM252 per box. A safety stock of 200 boxes is kept. The cost of placing and handling orders is estimated to be RM6,300, which is based cost incurred for similar orders that have already made. The cost of RM6,300 was for 30 orders. The inflation of 2 per cent should be added to the above ordering costs. Besides, the company estimates to be charged the transporation cost of RM15 per order. It should be assumed that ordering costs change in proportion to the number of orders place. Other costs which relate to material Z such as insurance, interest and space costs for a year, were calculated at 15 % of the purchase price. Required: a. Calculate the order…
DOGGE Ltd has annual demand of 50,000 desks and the purchase price of each desk is K250. There are ordering costs of K200 for each order placed. Inventory holding costs amount to 10% per year of inventory value. Calculate the inventory costs p.a. for the following order quantities, and plot them on a graph: 500 units, 750 units, 1000 units, 1250 units b) Using the information in (a) above calculate i) Economic Order Quantity and the total inventory costs for this order quantity.
Average Inventory Calculation—Fixed–Order Quantity ModelSuppose the following item is being managed using a fixed–order quantity model with safety stock.Annual demand (D) = 1,000 unitsOrder quantity (Q) = 300 unitsSafety stock (SS) = 40 unitsWhat are the average inventory level and inventory turn for the item?
Please complete the sup part: e,f and g. 1.B&H needs to decide how to manage its inventory of cameras. The demand for cameras at B&H is 200 cameras per week. Each time that B&H places an order for a new shipment of cameras, it must pay $80 in fixed processing fees. A camera costs B&H $60 to purchase. The cost for B&H to hold a camera in its store for one week is $4. Assume that the lead time for the delivery of a camera is 0 weeks.a. Suppose that B&H places orders for cameras in quantities of 50 cameras at a time and places a new order for cameras each time that it runs out. Draw a graph showing the number of cameras that B&H has on-hand in inventory at each point in time up until the time when it places its fourth-order. Label the points in time at which B&H places a new order. Assume that B&H places its first order for 50 cameras on day 0.b. Suppose again that B&H places orders for 50 cameras at a time. What will be B&H’s average holding…
The store wants to determine the Economic Order Size (EOQ) and Total Inventory Cost for this brand of carpet given an estimated annual demand of 10,000 yards of carpet, an annual carrying cost of P 37.50 per yard, and an ordering cost of P 7,500.00. The store would also like to know the number of orders that will be made annually and the time between orders (i.e., the order cycle), given that the store is open every day except 52 Sundays, Philippine Independence Day, New Year, and Christmas Day (which are assumed to fall not on Sundays) A. Using the computed optimal order size or EOQ, determine the optimum Total Cost. C. Determine the Order Cycle Time
Consider that you work at Kroger Grocery store, and that you've been tasked with creating an ABC inventory classification for 6 items. The 6 items, as well as their profit per case and number of cases sold per week, are as follows:Ribeye Steak - $135 in profit per case, 3 cases sold per weekLobster Tail - $245 in profit per case, 3 cases sold per weekPasta - $23 in profit per case, 12 cases sold per weekSalt - $3 in profit per case, 2 cases sold per weekNapkins - $12 in profit per case, 2 cases sold per weekTomato Sauce - $23 in profit per case, 11 cases sold per weekUsing total weekly profits, please classify each products into A, B, or C categories. Which items form the boundary of the class A and B items in your classification, and why? Which items form the boundary of the class B and C items in your classification, and why?
A manager receives a forecast for next year. Demand is projected to be 600 units for the first half of the year and 920 units for the second half. The monthly holding cost is $2 per unit, and it costs an estimated $55 to process an order. a.Assuming that monthly demand will be level during each of the six-month periods covered by the forecast (e.g., 100 per month for each of the first six months), determine an order size that will minimize the sum of ordering and carrying costs for each of the six-month periods. (Round your answers to the nearest whole number.) Period Order Size 1 – 6 months?_____units 7 – 12 months?_____units b.If the vendor is willing to offer a discount of $10 per order for ordering in multiples of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of the offer in either period? If so, what order size would you recommend? (Round intermediate calculations to 2 decimal places.) Period Order Size 1 – 6 months?____ units 7 – 12 months?____…
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .99. The order interval is 12 days, and lead time is 4 days. Average demand for one item is 63 units per day, and the standard deviation of demand is 6 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table. Use Table. Cycle On Hand 1 38 2 10 3 93 Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number) Cycle Units 1 1019 Numeric ResponseEdit Unavailable. 1019 incorrect. 2 1047 Numeric ResponseEdit Unavailable. 1047 incorrect. 3 964 Numeric ResponseEdit Unavailable. 964 incorrect.
3) The TCC Art Gallery prints a brochure for visitors to the senior art showcase it sponsors at thecollege. There are about 16000 visitors per year to this event (held year round). Holding costs for thebrochures are 25% and it costs $40 to place an order with the printer. The printer has offered thefollowing discount schedule:Category Order Size Unit Cost1 0 - 1499 $2.602 1500 - 2999 $2.303 3000 and over $1.90Answer the following questions in a text box in the worksheet.A) How many orders should be made?B) How many brochures should be printed at a time?C) Please copy these two numbers and include them on the executive summary (the first worksheet).
ABC Ltd has forecasted demand for its product ‘AB’ to be 400,000 units for the following year. The existing policy of the firm is to order 20000 units at a time and the cost per order is Rs. 1600. The holding cost per unit is Rs 20 per unit per year. The firm is now considering to use the economic order quantity model (EOQ) to determine order size of the product ‘AB’. A buffer stock of 4000 units of product ‘AB’ will be maintained by the firm, irrespective of whether order are made according to existing policy or using the EOQ model. Calculate the inventory costs of ABC Ltd based on its existing ordering policy? Calculate the inventory costs of ABC Ltd using the EOQ and advise the firm whether the EOQ is beneficial to the firm? ABC is considering to adopt the ‘Just-in-time’ approach to manage its inventories. Explain fully the conditions that are important for a firm to be able to operate with ‘ Just in time’ approach
Recently, a kiddie store has been given a quantity discount schedule for these cats. Thus, the normal cost for the toy cars is P200.00. For orders betweeen 1,000 and 1,999 units, the unit cost drops to P192.00. For orders of 2,000 or more units, the unit cost is only P190.00. Furthermore, ordering cost is P1,960.00 per order. Annual demand is 5,000 toy cars, and inventory carrying charge, as a percentage of cost, I, is 20%. What order size quantity will minimize the total inventory cost?