and $15 per unit per year to carry the item in inventory A shipment from the sup
ID: 344407 • Letter: A
Question
and $15 per unit per year to carry the item in inventory A shipment from the supplier is typically received 10 working days after an order is placed The store buys the product for $70 per unit and sells it for $140 per unit. At the moment the store uses an order quantity of 440 units Assume EOQ model assumptions f there are two blank boxes in any question, then you must put one of the following words in box: units, dollars, days, year, orders per year, dollars per year, units per order Answer the following questions (you should not use any commas in your answer) You must solve questions [1] through (6) assuming the store uses the current order quantity Questions 18) through [10] must be solved using the optimal order quantity (1) To fultfill the demand, the store must place orders por year 2] The average inventory level 41 The annual ordering costis 5) The annual holding costs 61 The time between any two orders isdays 17) The annual purchase cost isExplanation / Answer
EOQ model assumptions:
Here, D- demand for the year
Q- order quantity
Cp- cost price per unit
Rc- Reorder cost
Hc- Holding cost
T- Cycle length
1) to fulfil the demand, the store must keep Q= sqrt(2* D*Rc/Hc)
= sqrt( 2*6600*65/15)
=sqrt(57200)
~ 239 orders per year
2) The average inventory level= Q/2
= 239/2 = 120 units per order
3) The length of an inventory cycle= Q/D
= 239/6600
= .036 ~ 10 days
4) The annual ordering cost= Rc* D/Q + Cp * Q/2
= 65* 6600/239 + 70*239/2
= $ 10159.97 ~ $10160
5) The annual holding cost= Average inventory level * Holding cost per unit
= 120* 15= $ 1800
6) The time between any two orders =
No of orders= 6600/240= 27.5~ 28
therefore, time between orders= 300 working days/ 28= 10.7 ~11 days
7) Annual purchase cost= no of orders* ordering cost+ D* Cp
= 28* 65 +6600*70
=$463820
D $6600 Rc $65 Hc $15 T 10 days Cost price $70 Selling price $140Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.