a) The reorder quantity/ EOQ/ ROQ b) Ordering Cost c) Holding Cost
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ABC ltd uses 6250 kg of raw material per year. It costs RM10 to hold 1 kg for
One year, and the costs of ordering each consignment of raw materials are
RM200.
Calculate the following:
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- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.William Bevi lle's computer training school, inRichmond, stocks workbooks with the following characteristics:Demand D = 19,500 units/ yearOrdering costS = $25/ orderHolding cost H = $4/ unitjyeara) Calculate the EOQ for the workbooks.b) What are the annual holding costs for the workbooks?c) What are the annual ordering costs?Suria Enterprise has 15 items in the inventory. The annual demand and unit cost for each item are listed in Table Q1(a). i) Recommend an ABC classification system for the inventory. Table Q1(a) Annual Demand (unit) Item Unit cost ($) AA 3000 10.00 BB 2000 1.80 CC 3000 75.00 DD 2500 1000.00 ЕЕ 5000 300.00 FF 7000 2.50 GG 1000 5.00 HH 5000 12.00 JJ 4000 20.00 KK 2500 100.00 LL 1500 38.00 MM 1000 25.00 NN 3500 25.00 PP 3000 200.00 QQ 4000 240.00
- EOQ, reorder point, and safety stock Alexis Company uses 916 units of a product per year on a continuous basis. The product has a fixed cost of $60 per order, and its carrying cost is $3 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.)10 Use the information presented in the graph to answer the following questions: Annual Cost C3 C2 Q1 You are also given the following information: Q1 =450 .Q2 = 700 C1 = 350 C2 = 750 1300 Q2 Order Quantity Which annual inventory cost component does the blue line represent? Total cost Which annual inventory cost component does the green line represent? Holding cost What is the Economic Order Quantity (EQ9) based on th Which annual inventory cost component does the red line represent? Ordering cost 220EOQ, reorder point, and safety stock Alexis Company uses 937units of a product per year on a continuous basis. The product has a fixed cost of $44 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity.
- )Haulsee Inc. builds 800,000 golf carts a year and purchases the electronic motors for these carts for $370 each. Ordering costs are $540, and Haulsee's inventory carrying costs average 14% of the inventory value. What is the EOQ for Haulsee? d) Alpha Products maintains a capital structure of 40% debt and 60% common equity. To finance its capital budget for next year, the firm will sell $50 million of 11% debentures at par and finance the balance of its $125 million capital budget with retained earnings. Next year Alpha expects net income to grow 7% to $140William Beville’s computer training school, inRichmond, stocks workbooks with the following characteristics: Demand D = 19,500 units>yearOrdering cost S = +25>orderHolding cost H = +4>unit>yeara) Calculate the EOQ for the workbooks.b) What are the annual holding costs for the workbooks?c) What are the annual ordering costs?(a) Ignoring taxation, calculate the optimum order level of inventory over a one-year planning period using the EOQ model. (b) Estimate the level of safety inventory that should be carried by Toyzrfun Ltd. (c) If Toyzrfun Ltd were to be offered a quantity discount by its suppliers of 1% for orders of 30 000 units or more, evaluate whether it would be beneficial for the company to take advantage of the quantity discount. Assume for this calculation that no safety inventory is carried. (d) Estimate the expected total annual costs of inventory management if the EOQ had been (i) 50% higher, and (ii) 50% lower than its actual level. Comment upon the sensitivity of total annual costs to changes in the EOQ.
- Your company has the following items in inventory: Unit Cost $9 $90 $6 Item A B с D E F G H Annual Demand 1200 100 4500 400 35 250 1000 100 $150 $2000 $120 $90 $75 a) What is the annual dollar volume for all items b) Perform an ABC analysis on the data. Which are the A items, the B items and the C item: c) Why is it desirable to classify items into groups, as the ABC classification scheme does? d) Define and discuss the term "productivity" with help of productivity equation.A shop sells 5000 glasses in a year and the sales are relatively constant throughout the year. The glasses are purchased from Italy for RM 16.00 each. The lead time is 2 days. The holding cost per glass per year is RM 1.50 and the ordering cost per order is RM 8.00. There are 250 working days per year. a. What is the Economic Order Quantity (EOQ)? b. What is the average inventory and the annual inventory cost? c. In minimising the cost, how many orders would be made each year? What would be the ordering cost? d. What is the total annual inventory cost (including the purchase cost)? e. What is the duration between orders? f. What is the Re-order Point (ROP)?Replenishment of Regular Stocks of Farmacia Romy & Fe The following are the details regarding the stocks on Paracetamol tab 500 mg of Farmacia Romy & Fe: (a) 150 tablets are sold daily (b) 4 boxes of 100s are on hand as stocks of the drugstore (c) Inventory is every 30 days What should be the Order Quantity for the Paracetamol product? 150 tablets 400 tablets 4,500 tablets 4,900 tablets 50 boxes None of the given choices How is the quantity to be ordered computed or determined? Order Quantity = Average Daily Movement x (X)Days + Regular Order Order Quantity = (Average daily off take x Inventory days ) – Stock-on-hand Order Quantity = (Average daily off take x Inventory days ) + Stock-on-hand Order Quantity = Average Daily Movement x (X)Days -- Regular Order None of the given choices