04/30/2Problem #1 - Jasper Inc., a company that sells air conditioning units for cars intends to reduce its total annual inventorycost. The annual demand is expected to be 6,000 units if market conditions are unfavorable, and 9,000 units if marketconditions are favorable. The Purchasing & Warehousing Manager estimates that the ordering cost is $20.00 per orderand the holding cost is $2.00 per unit per year.a.- Calculate the Economic Order Quantity (EOQ), Annual Ordering Cost, Annual Holding Cost and TotalAnnuarinventory Cost under unfavorable and favorable market conditions.b.- The Purchasing & Warehousing Manager identified two improvement projects in conjunction with herteam:Project A: Reduction of ordering cost to $18.00.Project B: Reduction of holding cost to $1.40 per unit per year.Which project would result in greater reduction of the EOQ and Total Annual Inventory Cost?Which of the projects would you recommend and why? Show all your calculations.

Economic order quantity (EOQ) is the optimal order quantity that a company should purchase so that…

Answered: year. a. - Calculate the Economic Order…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Explain the conditions must exist for good inventory management ?
Antique manufactures old-fashioned telephones for use in movie scenes (and other displays). Antique's annual demand for rotary telephones is 33,000 units per year, so it needs just as many receptors to assemble the phones. Receptors are ordered from a supplier, and shipping and handling costs are $15 per order (regardless of how many units are on order). The holding costs are $7/unit/year. If the current company policy calls for orders of 3,000 receptors, what are the total annual inventory costs for the receptors? round your final answer to the nearest whole dollar.
Explain what condition must exist for good inventory management?
Company C&A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges Company C&A $30 per order and $50 per bottle. Company C&A’s annual holding cost percentage is 40%. Assume Company C&A operates 50 weeks in a year. What should C&A’s EOQ for this item be? What is C&A’s total annual cost using this EOQ?
4. Distinguish between physical inventory systems and perpetual inventory systems. Give an example of a company that would use each.
2. A company that manufactures household appliances outsources one of the component parts used in its products. The demand for this substance used by the company is constant and equals to 480 units per year. The supplier of the company has offered a price offer according to the table below, with all units at a discount. The firm assumes that the inventory holding cost percentage will be 20% and the ordering cost will be 150$. Find out how many component parts the firm should buy. (30p) Order Quantity 0 ≤Q <500 500 ≤Q< 1000 1000
Define the various elements of a good inventory management.
When inventory costs are falling over time and inventory volumes are steadyor increasing, which of the following inventory measurement systems givesthe lowest profit figures for the first year of trading?a) Weighted average costb) First in first out (FIFO)c) Last in first out (LIFO)d) None of the above – they all give the same profit figures
explain Inventory Costs?
1. Demand is Normally distributed with a mean of 66 per week and a weekly variance of 3. The ordering cost is $57.5. Lead time is 8 weeks. Shortages cost an estimated $4.14 per unit short to expedite orders to appease customers. The holding cost is $7.06 per week. Estimate the stockout risk if the target service level is 0.22. 2. Demand is Normally distributed with a mean of 43 per week and a weekly variance of 8. The ordering cost is $83.26. Lead time is 4 weeks. Shortages cost an estimated $1.96 per unit short to expedite orders to appease customers. The holding cost is $9.2 per week. Calculate ROP if the target service level is 95%.
Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. What quantity should be ordered, and which supplier should be used? Discuss factor(s) should be considered besides total cost.
As inventory manager, you must decide on the order quantity for an item that has an annual demand of 2,000 units. Placing an order costs you $20 each time. Your annual holding cost, expressed as a percentage of average inventory value, is 20 percent. Your supplier has provided the following price schedule:Minimum Order Quantity Price per Unit1 $2.50200 $2.40300 $2.251,000 $2.00What ordering policy do you recommend?

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