Metro Trading owned a factory to produce the automobile parts and has the following inventory, carrying and storage costs: 1. Annual Sales is 300,000 units. 2. The carrying cost is 20% of the purchase price; 3. The purchase price is RM25 per unit; 4. The ordering cost is RMI,500 per order, 5. The desired safety stock level 8,000 units; 6. The delivery time is I week (7days). d) What is the average inventory level? e) How much does the total annual inventory cost? f) Prepare a graph to shows your order point determination.

Metro Trading owned a factory to produce the automobile parts and has the following inventory, carrying and storage costs: 1. Annual Sales is 300,000 units. 2. The carrying cost is 20% of the purchase price; 3. The purchase price is RM25 per unit; 4. The ordering cost is RMI,500 per order, 5. The desired safety stock level 8,000 units; 6. The delivery time is I week (7days). d) What is the average inventory level? e) How much does the total annual inventory cost? f) Prepare a graph to shows your order point determination.

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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