ppData/Local/Temp/RarSD1a3864.1 71 59/Sample%20of%20Exam%202.pdf Carole has dete
ID: 2553195 • Letter: P
Question
ppData/Local/Temp/RarSD1a3864.1 71 59/Sample%20of%20Exam%202.pdf Carole has determined that the annual demand for number-6" screws is 100,000 screws. Carole, who works in her brother's hardware store, is in charge of purchasing. She estimates that it cots $10 every time an order is placed. This cost includes her wage, the cost of the forms used in placing the order, and so on. Furthermore, she estimates that the cost of carrying one screw in inventory for a year is one-half of 1 cent Assume that the demand is constant throughout the year. Price per screw is $0.1 1- How many "number-6" screws should Carole order at a time if she wishes to minimize the total inventory cost 2- How many orders per year would be placed ? and the cycle length 3- What would the average inventory value v/2" 4- What would the annual holding cost be? And the annual ordering cost be? 5- Total Cost 6- Devise your inventory policy, assume a lead time of 73 daysExplanation / Answer
1. Economic order qty= ?(2*demand*ordering cost/carrying cost)
=?({2*100000*10}/{$0.005*0.1})
=20000 screws
2. Orders per year= 100000/20000=5 orders
Cycle time= 12months/5orders= 2.4 months
3. Average inventory held= 1/2*20000=10000 units
Value=10000*$0.1=$1000
4. Annual holding cost= 10000*$0.005*12=$600
Annual ordering cost=5 orders*$10=$50
5. Total cost
Purchase Cost= 100000*$0.1=$10000
+ carrying cost=$600
+ ordering cost=$50
Total cost=$10650
Since question involves multiple questions. All parts have not been answered.Inconvenience is regretted!
Do give your feedback!! Happy Learning :)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.