innendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this

Question

innendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order zen-zens 48 times over the next year. The carrying cost is $0.04 per zen-zen per year. The order cost is $549 per order. What are the annual carrying cost, the annual ordering cost, and the optimal order quantity for the zen-zens? Verify your answer by calculating the new total inventory cost. innendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order zen-zens 48 times over the next year. The carrying cost is $0.04 per zen-zen per year. The order cost is $549 per order. What are the annual carrying cost, the annual ordering cost, and the optimal order quantity for the zen-zens? Verify your answer by calculating the new total inventory cost. innendo, Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year. Note that this figure is for annual sales. The inventory manager plans to order zen-zens 48 times over the next year. The carrying cost is $0.04 per zen-zen per year. The order cost is $549 per order. What are the annual carrying cost, the annual ordering cost, and the optimal order quantity for the zen-zens? Verify your answer by calculating the new total inventory cost.

Explanation / Answer

A / 1 B C D E F G 2 Innedo Inc. 3 Annual Sales 4000000 zen-zens 4 Order numbers planned 48 times 5 Order Cost $549 per order 6 Carrying cost $0.04 per zen-zens 7 Inventory carrying cost = Average Inventory*carrying cost per unit 8 Average inventory? 9 Quantity per each order                    83,333 =C3/C4 10 Average inventory=                    41,667 =(0+C9)/2 11 Total Carrying Cost per annum $1,666.67 =C10*C6 12 Annual ordering Cost = No of orders*Order cost per order $26,352.00 =C5*C4 13 total Inventory cost $28,018.67 =C12+C11 14 15 Economic Order Quantity = SQRT(2*Annual Quantity*Ordering Cost per Order/Carrying cost per unit) 16 EOQ=           331,360.83 zen-zens 17 There fore number of orders shall be                            12 18 Carrying cost as per EOQ $6,627.22 =C16/2*C6 19 Ordering cost $6,588.00 =C17*C5 20 total Inventory cost $13,215.22

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