PT. Maju Jaya in the coming year requires 240,000 units of raw materials. The pr
ID: 396829 • Letter: P
Question
PT. Maju Jaya in the coming year requires 240,000 units of raw materials. The price of raw materials per unit is IDR 2,000. the message cost for each time an order is Rp150,000, while the storage fee is 25% of the average inventory value.
Question:
a. What is the most economical order number (EOQ)?
b. how many orders must be made in a year?
c. how many days does the company make an order (1 year = 360 days)?
d. if the time taken from the time of ordering until the raw material arrives at the company is 2 weeks, when should the company reorder (Reorder Point). If it is assumed 1 year = 50 weeks?
Explanation / Answer
Demand (D) = 240,000 units
Order cost (S) = 150,000
Price (P) = 2,000
Holding cost (H) = P*25% = 2000*25% = 500
a) EOQ = sqrt(2*D*S/H) = sqrt(2*240000*150000/500) = 12,000 units
b) Number of orders = D/EOQ = 240000/12000 = 20
c) Number of days company make order = Total days in an year/Number of orders = 360/20 = 18
d) Lead Time is 2 weeks
Weekly demand = D/50 = 240000/50 = 4800 units
Reorder point = Weekly demand*Lead time = 4800*2 = 9600 units
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