The following information relates to the forthcoming period:- Order costs = $25per order Holding costs = 17% of purchase price Annual demand = 16,000 units Purchase price = $17 per unit Order quantity = 650 units Required:- What are the total annual costs of inventory?

The following information relates to the forthcoming period:- Order costs = $25per order Holding costs = 17% of purchase price Annual demand = 16,000 units Purchase price = $17 per unit Order quantity = 650 units Required:- What are the total annual costs of inventory?

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Description: The following information relates to the forthcoming period:-Order costs = $25per orderHolding costs = 17% of purchase priceAnnual demand = 16,000 unitsPurchase price = $17 per unitOrder quantity = 650 unitsRequired:-What are the total annual costs o

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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Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $12 each and are ordered in quantities of 1300 units. Annual demand is 5200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following: (a) Average inventory level (b) The number of orders placed per year (c) The total annual inventory holding cost (d) The total annual ordering cost (e) The total annual cost
The EOQ model with quantity discounts attempts todetermine:a) the lowest amount of inventory necessary to satisfy acertain service level.b) the lowest purchase price.c) whether to use a fixed-quantity or fixed-period orderpolicy.d) how many units should be ordered.e) the shortest lead time
The following information relates to Unique Ltd for the year 2020: Annual Demand 408,375 units Annual cost of Holding £1.50 Annual cost of placing an order £ 500Required: (iv) Calculate the total annual inventory cost (excluding the purchasecost)
Design your own inventory management problem with the required input data and answer the following questions : a. What is the optimal order size? b. What is the optimal number of orders per year? What is the optimal number of days between orders? d. What is the annual inventory cost? e. If the lead time were X days/weeks/months, what would be the reorder point? f. For what value of ordering cost would Y units of order size be optimal?
Please help solve this within 45 min.. please Mega Sdn . Bhd is a wholesaler which buys and sells wide range of products. One of the products is called M3. Each month the company buys 100 units of M3 at cost of RM20 each. Each unit of M3 requires two square feet of space at a cost of RM4 per square foot per annum. Other holding costs are estimated to be 10% of the purchase price. For each order placed, it costs the company RM700. Required: Determine the economic order quantity by using formula.
In the past, Taylor Industries has used a fixed−time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as shortage costs. Here is a random sample of 20 of Taylor's items. ITEMNUMBER ANNUALUSAGE ITEMNUMBER ANNUALUSAGE 1 $1,900 11 $13,800 2 12,700 12 1,000 3 2,700 13 43,600 4 51,800 14 10,600 5 10,300 15 1,600 6 1,200 16 10,900 7 2,500 17 4,500 8 11,700 18 63,200 9 5,600 19 4,000 10 15,800 20 3,400 a. Classify each item in inventory using an ABC plan. item # Class (A, B, or C) 1 2 3 4 5 6 7 8 9 10
A local service station is open 7 days per week, 365 days per year. Sales of 10W40 grade premium oil average 20 cans per day. Inventory holding costs are $0.50 per can per year. Ordering costs are $10 per order. The lead time is two weeks. Backorders are not practical— the motorist drives away.a. Based on these data, choose the appropriate inventory model and calculate the economic order quantity and reorder point. Describe in a sentence how the plan would work. Hint: Assume demand is deterministic.b. The boss is concerned about this model because the demand really varies. The standarddeviation of demand was determined from a data sample to be 6.15 cans per day. Themanager wants a 99.5 percent service probability. Determine a new inventory planbased on this information and the data in part (a). Use Qopt from part (a).
Hayes Electronics assumed with certainty that the ordering cost is $450 per order and the inventory carrying cost is $170 per unit per year. However, the inventory model parameters are frequently only estimates that are subject to some degree of uncertainty. Consider four cases of variation in the model parameters: (a) Both ordering cost and carrying cost are 10% less than originally estimated, (b) both ordering cost and carrying cost are 10% higher than originally estimated, (c) ordering cost is 10% higher and carrying cost is 10% lower than originally estimated, and (d) ordering cost is 10% lower and carrying cost is 10% higher than originally estimated. Determine the optimal order quantity and total inventory cost for each of the four cases. Prepare a table with values from all four cases and compare the sensitivity of the model solution to changes in parameter values.
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William Beville's Computer Training School in Richmond stocks notebooks for sale and would like to reduce its inventory cost by determining the optimal number of notebooks to order in each order. The ordering cost for each order is $27. The annual demand is 19455 units. The annual cost of holding each unit is $6. Each notebook costs $12. The school has a year of 250 working days. When a new order of notebooks is made, the supplier takes 4 days to deliver it. Show your work. 1. What inventory management model should we use to solve this problem? Model Economic Quantity to Order Model for discount purchases Model Economic Quantity to Produce Model to handle dependent demand 2. What is the optimal number of notebooks to make in each order? Response 3. What is the annual ordering cost (AOC)? Response 4. What is the Annual Holding Cost (AHC)? Response 5. What is the annual product cost (APC)? Response 6. What is the annual total cost of managing inventory (ATC) Answer 7. What would be the…
A clothing manufacturing company requires raw materials for 8 consecutive weeks as follows: 30, 40, 50, 35, 60, 30, 40, and 30 units with a one-time order cost of $50,000 and a storage fee of $500 per unit/week. From these data calculate the total cost of procurement using:a. Lot For Lot (LFL) Methodb. Economic Order Quantity (EOQ) Methodc. Period Order Quantity (POQ) Methodd. In your opinion as an operations manager at the company which method would you choose? Explain, why?