An automotive supply store sells a product that has a demand of 400 units per month. Its supplier charges an ordering cost of $60 per order and $25 per unit with a 20% discount for orders of 250 units or higher. The store incurs a 20% annual holding cost. What is the store's annual holding cost if it orders at a quantity of 300 units?

An automotive supply store sells a product that has a demand of 400 units per month. Its supplier charges an ordering cost of $60 per order and $25 per unit with a 20% discount for orders of 250 units or higher. The store incurs a 20% annual holding cost. What is the store's annual holding cost if it orders at a quantity of 300 units?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

See similar textbooks

Similar questions

As inventory manager, you must decide on the order quantity for an item that has an annual demand of 2,000 units. Placing an order costs you $20 each time. Your annual holding cost, expressed as a percentage of average inventory value, is 20 percent. Your supplier has provided the following price schedule:Minimum Order Quantity Price per Unit1 $2.50200 $2.40300 $2.251,000 $2.00What ordering policy do you recommend?
Please complete the problem usinf EXCEL, Show ALL formulas Demand for a popular athletic shoe is nearly constant at 800 pairs per week for a regional division of a national retailer. The cost per pair is $54. It costs $72 to place an order, and annual holding costs are charged at 22% of the cost per unit. The lead time is two weeks. a. What is the EOQ? b. What is the reorder point? c. What is the cycle time? d. What is the total annual cost?
Please show work so I can understand it. A company decides to establish an EOQ for an item. The annual demand is 200,000 units. The ordering costs are $40 per order, and inventory-carrying costs are $16 per unit per year. Calculate the following: (a). The EOQ in units. (b). Number of orders per year. (c). Annual ordering cost, annual holding cost, and annual total cost
Antique manufactures old-fashioned telephones for use in movie scenes (and other displays). Antique's annual demand for rotary telephones is 33,000 units per year, so it needs just as many receptors to assemble the phones. Receptors are ordered from a supplier, and shipping and handling costs are $15 per order (regardless of how many units are on order). The holding costs are $7/unit/year. If the current company policy calls for orders of 3,000 receptors, what are the total annual inventory costs for the receptors? round your final answer to the nearest whole dollar.
Demand for a product is relatively constant at 5 units per day. Lead time for this product is normally distributed with a mean of 20 days and a standard deviation of 4 days. (a) What reorder point provides an 80 percent service level? (b) What reorder point provides a 90 percent service level? (c) If the lead time standard deviation can be reduced from 4 days to 1, what reorder point now provides 90 percent service? How much is safety stock reduced by this change?
An ophthalmologist's office operates 52 weeks per year, 6 days a week. It purchases disposable contact lenses for $11.70 per pair and sells for $50. The demand is 90 pairs per week. Order cost is $54 per order. Annual interest rate is 27%. Lead-time is 3 weeks. Standard deviation of weekly demand is 15 pairs. Given that 98% service-level. Clearly identify different types of stocks: cycle, safety and pipeline. a. Find a (Q, r) policy for this situation c. Find average service level (fill rate) of the policy (a) d. Find average backorder level of the policy (a) e. Find average inventory level of the policy (a)
abc company sells 5,500 pens per year with a constant demand throughout the year. ABC purchases the pens at the cost of $300 per unit. ordering cost for the company is$100 per order. holding cost for the company is $10 per year. curently the company is ordering the products in lots of 200 units. what would be the total holding cost for ABC?
Demand during lead time for one brand of TV is normallydistributed with a mean of 36 TVs and a standard deviationof 15 TYs. What safety stock should be carried for DennisYu's Appliance Outlet to provide a 90% service level? What is theappropriate reorder point?
www.www A toy manufacturer uses approximately 40000 silicon chips annually. The chips are used at a steady rate during 350 working days per year. The annual holding cost is $4 per chip, ordering cost is $145, and lead time is 5 days. Determine the annual cost saving if company uses optimal EOQ (part a) instead of current order quantity of 3000 units (Round your answer to 1 decimal places)
Tax Preparers, Inc. works 250 days per year. Th e companyuses adding machine tape at a rate of eight rolls per day. Usageis believed to be normally distributed with a standard deviationof three rolls during lead time. Th e cost of ordering the tape is$10, and holding costs are $0.30 per roll per year. Lead time istwo days.(a) Calculate the economic order quantity.(b) What reorder point will provide an order-cycle servicelevel of 97 percent?(c) How much safety stock must the company hold to have a97 percent order-cycle service level?(d) What reorder point is needed to provide an order-cycleservice level of 99 percent?(e) How much safety stock must the company hold to have a99 percent order-cycle service level?
ons Management Fall20 Al Khaleej Inc. needs 325 kgs of a material per month. It costs RO 100 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 15% of purchase price. The price RO 3 per kg. The company is operating 6 days per week. What is the best annual total holding and ordering cost in RO? Round- up to the nearest integer Select one: a. 484 Ob. None is correct C. 625 d. 593 O e. 502 Next pag
7. Alocal retailer anticipates an annual demand 12000 units of a product. The retailers allows shortages for that product, and these shortages are backordered at a rate of 2 OMR per unit backordered. The cost of ordering is 200 OMR, whereas , the annual holding cost is 1 OMR per unit. The retailer operates 300 days per year. What is the minimum total inventory cost in OMR? Round -up to the nearest integer a. 1998 b. 1550 c. 1789 d. None is correct e. 2000 f. 1987 g. 1898