Discuss the relationship between holding cost and ordering cost on the basis of the economic ordering model with the support of figures of the formula ? annual demand K being ordering cost, h holding cost ?∗ calculating the optimum economic ordering quantity.
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Discuss the relationship between holding cost and ordering cost on the basis of the economic ordering model with the support of figures of the formula ? annual demand K being ordering cost, h holding cost ?∗ calculating the optimum economic ordering quantity.
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- Define each of the following terms: c. Economic Ordering Quantity (EOQ); EOQ model; EOQ rangeProblem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one Item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire Holding cost Demand Ordering cost Standard deviation of daily demand Delivery lead time Order quantity $ tires 50 each percent of tire cost per year Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year. a. Determine the order quantity. (Round your answer to the nearest whole number.) 15 1,100 per year $ 22 per order 4 tires 5 daysExplain why it is not necessary to include product cost (price or price time quanity in the EOQ model, but the quantity discount model requires this information ?
- Paulin’s muffler shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information table to determine the optimal inventory target level (or order-up to level). Annual demand 3,910 mufflers ordering cost $75 per order S/D of daily demand 6 mufflers/wk. day service probability 87% Item cost $ 27.00 per muffler lead time 2 wk. Days Annual holding cost 36 % of item value wk. Days 230 per year Review period 18 working days What is the optimal target levels (order up to levels) use excels NORMSINVI() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round value 2 decimal places and final answer to the nearest whole number If the service probability is 90%, the optimal target level will increase, decrease or…Ezrah is attempting to perform an inventory analysis on one of her most popular beauty products, the Heavenly perfume Annual demand for this product is 10,000 units with carrying costs of P50 per unit per year . ordering costs for her company typically run P100 per order Lead time averages 10 days (Assume 250 working days) What is the economic order quantity?Problem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW. A perpetual inventory system has been used, so you examine this, as well as other records, and come up with the following data: Cost per tire Holding cost Demand 50 each 25 percent of tire cost per year 1,100 рer year Ordering cost Standard deviation of daily demand Delivery lead time 32 per order 7 tires 8 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year. a. Determine the order quantity. (Round your answer to the nearest whole number.) Order quantity 75 tires b. Determine the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not…
- L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company's manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system? (Round dollar volume to the nearest whole number and percentage of dollar volume to two decimal places.) L. Houts Plastics Charlotte Inventory Levels Item Code Avg. Inventory (units) Value ($/unit) Dollar Volume % of Dollar Volume 1289 380 3.50 insert answer insert answer 2347 300 4.00 1,200 37.83 2349 120 2.50 300 9.46 2363 75 1.30 insert answer insert answer 2394 60 1.75 105 3.31 2395 25 2.00 insert…A gift shop sells Little Lentils dolls at a steady pace of 10 per day, 310 days per year. The cost of the dolls is $5, and the gift shop uses an annual interest rate of 20 percent to compute holding cost. Question 1: Assuming an order quantity of 250 dolls and the cost of placing an order of $10, what is the average annual ordering cost (cost to place orders, not purchasing cost)? Question 2: Assuming an order quantity of 250 dolls, what is the average annual inventory holding cost?Maira Hijab Enterprise (MHE) is a supplier that sells Exclusive Embroidery Silk Hijabs to boutique and online resellers. The annual demand is approximately 360 hijabs. MHE pays RM50 for each hijab and estimates that the annual holding cost is 2 percent of the hijab's value. It costs approximately RM100 to place an order (managerial and clerical costs). Required: Determine the economic order quantity (EOQ) (Round up your answers to the nearest figure). а. b. Assuming a 300-day work year, how many orders should be processed per year and what is the expected time between orders? С. Calculate the total cost for the order. d. After several months of the introduction of the Exclusive Hijab, MHE decides to all costs related to their product due to the increment of hijab’s costs by the supplier. MHE currently orders 1000 hijabs per month. The new information as regards to the Exclusive Hijab is as follows: i. The ordering cost for these is RM100 per order and ii. The carrying cost is assumed…
- Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy soccer jerseys product line. This is a highly popular item. The following data for 2020 has been provided: Expected annual demand for Galaxy jerseys 10,000 Shirts Ordering cost per purchase order Shs.200 Holding cost per year Shs 7 per jersey Each jersey is purchased at a cost of Shs.40 and sells for Shs.80. The purchasing Delivery time is 7 days. FB is open 365 days a year.Required:i) Calculate the EOQ.Problem 20-36 (Algo) Palin’s Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level (or order-up-to level). Annual demand 3,910 mufflers Ordering cost $ 75 per order Standard deviation of daily demand 6 mufflers per working day Service probability 87 % Item cost $ 27.00 per muffler Lead time 2 working days Annual holding cost 36 % of item value Working days 230 per year Review period 18 working days a. What is the optimal target level (order-up-to level)? (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.) Optimal target level_________________ b. If the…Earthbound Corporation is a manufacturer and distributor of air conditioning systems. You have been engaged to install an accounting system for Earthbound period among the inventory control features earthbound desires as part of the system are indicators of how much to order and when period. The following information is furnished for a product called “Hydronix” which is carried in inventory: Hydronix are sold by the gross (12 dozen) at a list price of P800 per gross FOB shipper. John receives a 40% trade discount off list price on purchases in gross lots. Freight cost is P20 gross from the shipping point to John's plant John uses about 5,000 Hydronix during 259-day production year and must purchase a total of 36 gross per year to allow for normal breakage. Minimum and maximum usages are 12 and 28, respectively. It takes 20 working days (normal delivery time) to receive an order from the date the purchase request is initiated. A rush order in full gross lots can be received by air…