ewJoe Henry\'s machine shop uses 2,490 brackets during the course of a year Thes
ID: 343892 • Letter: E
Question
ewJoe Henry's machine shop uses 2,490 brackets during the course of a year These brackets are purchased from a supplier 90 miles away, The following information is known about he brackets 2,490 Annual demand Holding cost per bracket per year$1.60 Order cost per order Lead time Working days per year S19.25 2 days 250 a) What is the EOO? units (round your response to two decimal places) 6b)What is the average inventory if the EOQ is used? units (round your response to two decimal places) What would be the annual inventory holding cost? S round your response to two decimal places 8c)Given the EOQ, how many orders will be made annually? orders (round your response to two decimal places) 9What would be the annual order cost? s(round your response to two decimal places response to two decimal places) round your response to two decimal places). d)Given the EOQ, what is the total annual cost of managing (ordering and holding) the inventory? SIIl (round your r e)What is the time between orders? days (roun f response to two decimal places. d your 12 What is the reorder point RP ?units i 15 Enter your answer in each of the answer boxes. Show All x QM 352 Grade Projec xlsxExplanation / Answer
A.
EOQ = (2*annual demand*ordering cost/holding cost)^.5
EOQ = (2*2490*19.25/1.6)^.5
EOQ = 244.78 units
B.
Average inventory = EOQ/2 = 244.78/2 = 122.39 units
Annual inventory holding cost = Average inventory*holding cost per unit per year
Annual inventory holding cost = 122.39*1.6 = $195.82
C.
No. of orders made annually = Annual demand / EOQ = 2490/244.78 = 10.17 orders
Annual ordering cost = 10.17*19.25 = $195.77
D.
Total annual cost of managing = Annual inventory holding cost + Annual ordering cost
Total annual cost of managing = 195.82+195.77
Total annual cost of managing = $391.59
E.
Time between orders = 250/10.17 = 24.58 days
F.
ROP = Daily demand * Lead time = (2490/250)*2 = 19.92 units
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