EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 11, Problem 1.2DQ
Summary Introduction
Interpretation: The concept of EOQ is to be stated along with the reorder point with safety stock for Strike Disinfectant.
Concept Introduction:
The order quantity that reduces the ordering costs and total holding costs in inventory management is called Economic order quantity.
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- Average demand = μ = 350 kits Standard deviation of demand during lead time = LT= 10 kits 5% stockout policy (service level = 95%) Q1.1. What reorder point should be?arrow_forwardBarbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, themean lead time demand for bandage BX-5 was 60 (and wasnormally distributed). Furthermore, the standard deviationfor BX-5 was 7. Ms. Flynn would like to maintain a 90%service level. a) What safety stock level do you recommend for BX-5?b) What is the appropriate reorder point?arrow_forwardB). As an inventory manager, you must decide on the order quantity for an item. Its annual demand is 679 units. Ordering costs are $7 each time an order is placed, and the holding cost is 10% of the unit cost. Your supplier provided the following price schedule. Quantity Price per Unit 1 - 100 $5.65 101 - 350 $4.95 351 or more $4.55 What ordering-quantity policy do you recommend?arrow_forward
- Describe inventory accuracy and cycle counting ?arrow_forward(c) A company which produces washing machines has to store a certain item, and two such items are needed to assemble one washing machine. Annual demand for machines is 1000 units. The following information is available. Ordering cost = Rs.250 per order Inventory holding cost = Rs.125 per unit per year Back-order cost = Rs.150 per unit per year Find the following. i) Economic order quantity ii) Optimum level of shortagearrow_forwarda) What is the economic order quantity? b) Find the annual holding costs.c) Find the annual ordering costs.d) What is the reorder point?arrow_forward
- Outlook Gateways has a demand of 75 Lakhs per year. Setup cost and holding cost are 29 and 35 per unit. Number of pieces in a order includes 2.3 Lakhs per order. Printing is done 300 days and 2 days to deliver this magazine. What can be the EOQ of this? With above data find the Setup Cost and Holding cost for a year. What is the Reorder Point. What is the annual demand to production ratio in this case. What does it indicate for the company? Launch a magazine and plan the Inventory and Production process in great details. List down your assumptions carefully.arrow_forwardThe following information relates to Unique Ltd for the year 2020: Annual Demand 408,375 unitsAnnual cost of Holding $1.50Annual cost of placing an order $500 (i) Calculate the EOQ (ii) Calculate the average inventory (iii) Calculate the total annual ordering cost (iv) Calculate the total annual inventory cost (excluding the purchase cost)arrow_forwardA material manager adopts the policy to place an order for a minimum quantity of 500 of a particular item in order to avail a discount of 10 percent. It was found from the company records that for last year 8 orders were placed each of size 200 Nos, ordering cost is ksh 500 per order. Inventory carrying charges at 40 per cent cost unit is ksh 400. (a) Show whether the purchase manager is justified in his decision (b) What is the effect of this decision on the companyarrow_forward
- Describe what is carrying cost in inventory management?arrow_forwardWhat is reorder point and provide an example of it.arrow_forwardDiscount-Mart, a major East Coast retailer, wants to determine the economic order quantity for its halogen lamps. It currently buys all halogen lamps from Specialty Lighting Manufacturers, in Atlanta. Annual demand is 2,000 lamps, ordering cost per order is $60, carrying cost per lamp is $12. a) What is the EOQ? lamps per order (round your response to the nearest whole number).arrow_forward
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