Answered: Monthly Sales for previous year were…

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 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Monthly Sales for previous year were 10,000 Mobile Phones. Overall Market has grown at 15% from the previous year. The company uses a third-party storage solution for keeping its inventory. The charges are Rs. 100/unit. For procuring the raw material company relies on a contractor which provides them a one stop solution and charges Rs. 3000 per order. The actual cost of the raw material is approximately 7000/unit.

Using the above given information answer the following questions?

A. What is the Economic Order Quantity for the company?

B. If a working year is 300 days find out how many orders the company will place for the current year and what would the gap between two orders?

C. What will be the total cost of inventory policy for the company?

D. If the delivery lead time for receiving the order is 20 days what should be the reorder point for the company?

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