A local electronic repair shop uses 15,000 units of mobile batteries each year. It costs RO 30 to place and receive an order. It cost of material is RO 15 per unit and carrying cost is 24% of the cost per unit. Calculate the Economic Order Quantity for the shop, number of orders and total inventory costs.

A local electronic repair shop uses 15,000 units of mobile batteries each year. It costs RO 30 to place and receive an order. It cost of material is RO 15 per unit and carrying cost is 24% of the cost per unit. Calculate the Economic Order Quantity for the shop, number of orders and total inventory costs.

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...

See similar textbooks

Similar questions

A local electronic repair shop uses 15,000 units of mobile batteries each year. It costs RO 30 to place and receive an order. It cost of material is RO 15 per unit and carrying cost is 24% of the cost per unit. Calculate the Economic Order Quantity for the shop, number of orders and total inventory costs. 2. Beta Merchandising Company purchases mobiles directly from manufacturers and sells it to small retailers. The following transactions occurred during 2020: March, 21st: 80 mobiles on hand @ RO 40 each. May, 14th: 120 mobiles purchased @ RO 50 each. July, 10th: 80 mobiles purchased @ RO 60 each. September 16th: 50 mobiles purchased @ 80 each Alpha merchandising sold 300 mobiles during 2020 Required: Compute the Cost of Inventory sold during 2020 and the value of closing inventory under the following cost inventory methods. (a). First in, first out (FIFO) (b). Last in, first out (LIFO) (c) Average cost method
A microbrewery purchases malt for production. The supplier charges $35 for delivery (no matter how much is delivered) and $1.20 per gallon. The annual holding cost is 35% of the price per gallon. Usage is 250 gallons/week. a) If the order quantity is 1000 gallons, what is the average inventory? b) If the order quantity is 1500 gallons, how many orders are placed each year? c) What is the EOQ quantity? d) If the order quantity is 2500 gallons, what is the sum of the ordering and holding costs PER GALLON? e) If orders are for the EOQ amount, what is the annual cost of the inventory system as a percentage of the annual purchase cost? f)If orders must be in integer multiples of 1000 gallons, how much should be ordered to minimize ordering and holding costs PER GALLON? g) A 3% purchase price discount is given if orders are for 8000 gallons or more. What would total annual costs (purchasing, ordering, and holding) be using this discount?
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery’s value. It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month. What is the economic order quantity?
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays set up cost equal to $20 for each battery and estimates that the annual holding cost is $8.4. The working days for the company are 300 days per year Determine the economic order quantity (EOQ)
A large bakery buys sugar in 50-kg bags. The bakery uses an average of 1,344 bags a year. Preparing an order and receiving a shipment of sugar involves a cost of $135. Annual carrying costs are $630 per bag. The bakery operates 280 days per year. Lead time = 2 weeks. Determine the economic order quantity. What is the average number of bags on hand? When should the bakery order for more sugar? How many times per year will the bakery order for sugar?
An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays $28 for each battery and estimates that the annual holding cost is 30 percent of the battery’s value. It costs approximately $20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month. What is the economic order quantity? Based on your answer above, how many orders will be placed per year using the EOQ? Determine the ordering, handling, and total inventory costs for the EOQ. Determine the effective annualized cost of financing for the following credit terms, assuming that (1) discounts are not taken, (2) accounts are paid at the end of the credit period, and (3) use 365=day year: a. 1/10, n/30; b. 3/10, n/30; c. 3/10, n/60; d. 2/10, n/90
A supermarket uses a supplier for its bottled water. The annual demand for this product is 24000 units. The supermarket purchases bottled water from its supplier at a price of $0.8 per bottle. The holding cost per of water per year is $0.4. The ordering cost for the supermarket is $80 per order and the lead time is 2 days. The company operates 250 days a year. The supermarket uses Economic Order Quantity model to manage its inventories. What is the recorder point?
Following are some of the information on demand and costs of a mobile phone manufacturer: 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?
A service garage uses 204 boxes of cleaning cloths a year. The boxes cost $12 each. The cost to place one order is $15, and the cost to hold one box in inventory for a year is $2.40. Using this information, what is our total holding and ordering cost if we currently order 12 boxes at a time?
A supermarket uses a supplier for its bottled water. The annual demand for this product is 24000 units. The supermarket purchases bottled water from its supplier at a price of $0.8 per bottle. The holding cost per of water per year is $0.4. The ordering cost for the supermarket is $80 per order and the lead time is 2 days. The company operates 250 days a year. The supermarket uses Economic Order Quantity model to manage its inventories. a).What is the inventory cycle time(time between orders)?
A hardware store sells paint that has a demand of 9,706 gallons per year. The store purchases the paint from a supplier for 11.2 dollars per gallon The unit holding cost per year is 24 percent of the unit purchase cost. while the ordering cost is 175 dollars per order. The paint supplier has a lead time of 10 days. What is the annual ordering cost if the store uses the order quantity of 2,103 gallons per order? Assume EOQ model is appropriate. Use at least 4 decimal places.
Malburn Construction Ltd. Manufactures and distributes window frames. The company uses 600,000metal strips in producing the frames for the year. Each strip cost $15, the storage cost is 10% of the costprice and $180 is required to make an order.(i). Find the order size Malburn Construction needs to minimize its inventory costs. Calculate for the company:(ii). the number of orders placed per year. (iii).the length of the stock cycle in days. (iv). the annual ordering cost (v). the annual holding cost (vi). the total annual cost