Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per year. Required: (a). What is the EOQ? ( b.) Given the EOQ, what is the average inventory? What is the annual inventory holding costs? ( c). In minimizing cost, how many orders would be made each year? What would be the annual ordering cost?
Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per year.
Required:
(a). What is the EOQ?
( b.) Given the EOQ, what is the average inventory? What is the annual inventory holding costs?
( c). In minimizing cost, how many orders would be made each year? What would be the annual ordering cost?
( d). Given the EOQ, what is the total annual inventory cost, including purchase cost?
( e). What is the time between orders?
( f). What is the reorder point, ROP?
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