Yen Inc. uses one raw material type in its manufacturing process. It needs 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If Zen purchases 1,000 kilograms each time, how much lower would the annual cost be if Zen would now follow the EOQ model?

Yen Inc. uses one raw material type in its manufacturing process. It needs 3,750 kilos of this material each month. It incurs P500 each time when making and receiving orders. Annual carrying cost per unit costs P15 in warehousing and P5 in financing costs. If Zen purchases 1,000 kilograms each time, how much lower would the annual cost be if Zen would now follow the EOQ model?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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