For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?

For a given product, the order placement cost is $5, the holding cost per unit per year is $10, and annual demand is 1,600 units. If the EOQ is used, please answer the following questions: (please show calculations to reach your answer) 1. what's the economic order quantity? 2. what's the total annual logistics costs? 3. How many orders will be placed over the course of a year? 4. How much time elapses between order placements? 5. The purchasing manager has been negotiating with the supplier, and the latter has agreed to the following terms: Lower order placement costs ($4 instead of $5) and higher holding costs ($12 instead of $10). Do you think this a good deal? Why or why not?

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

.How are service level and inventory level dependent on each other? How would factors like lead time and lot size impact different types of inventory?
Chris Sandvig Irrigation, Inc., has summarizedthe price list from four potential suppliers of an undergroundcontrol valve. See the accompanying table. Annual usage is2,400 valves; order cost is $10 per order; and annual inventory holding costs are $3.33 per unit.Which vendor should be selected and what order quantityis best if Sandvig Irrigation wants to minimize total cost?
You work as a planner in the supply chain department for AFIA co. Given the monthly gross requirements for one of the items (Carton). Your job is to develop an ordering plan and costs for: a) Lot-for-lot. b) EOQ. c) Which plan should we select ? Calculate the total cost of each plan. Please use the following information : Holding Cost per month = $ 0.75 Set Up Cost = $ 150 Lead time = 0 Master Production Schedule : Month 1 2 4 5 6. Gross requireme 100 150 200 150 100 150 250 nts Attach your solutions (Answer the total cost of EOQ plan in field)
10 Use the information presented in the graph to answer the following questions: Annual Cost C3 C2 Q1 You are also given the following information: Q1 =450 .Q2 = 700 C1 = 350 C2 = 750 1300 Q2 Order Quantity Which annual inventory cost component does the blue line represent? Total cost Which annual inventory cost component does the green line represent? Holding cost What is the Economic Order Quantity (EQ9) based on th Which annual inventory cost component does the red line represent? Ordering cost 220
Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager would like you to determine a minimum-cost inventory plan for an upcoming mobile phone to be launched in the market. They have collected the following information: • Annual demand: 750 phones • Phone cost: $1,005 each• Phone RRP: $1,149 each• Net weight: 167 g each • Tare weight: 257 g each• Annual inventory holding cost: 27.5%• Cost per order to replenish inventory: $81.71• Annual in-transit holding cost: 10%• Freight rate (per kg): $8.10• Freight-related charges (per shipment): $276.50 (i.e. handling fee, dangerous good fee, and lithium battery fee)• Time to process order for freight: 2 day • Freight transit time: 5 days The manager wants you to determine the following information: a. Economic order quantityb. The total purchasing costc. The total ordering cost d. The total inventory holding coste. The total transportation cost (by weight)f. The total freight-related cost (by shipment) g.…
Your company has the following items in inventory: Unit Cost $9 $90 $6 Item A B с D E F G H Annual Demand 1200 100 4500 400 35 250 1000 100 $150 $2000 $120 $90 $75 a) What is the annual dollar volume for all items b) Perform an ABC analysis on the data. Which are the A items, the B items and the C item: c) Why is it desirable to classify items into groups, as the ABC classification scheme does? d) Define and discuss the term "productivity" with help of productivity equation.
Please Show EVERY Working VERY Clearly! Calculate the Economic Order Quantity, Total Annual Cost, Reorder Point, and ADDITIONAL Annual Cost (using a GRAPH) if the Procurement Manager increase the order quantity by 25% from the above EOQ.
HOW MUCH TO ORDER: ECONOMICORDER QUANTITY MODELS.
Describe how different forms of inventory are affected by factors such as lead time and lot size?
Briefly describe each of the costs associated with inventory.
Calculate total annual cost for the alternative suppliers for aproduct with following characteristics: montly demand; mean: 5000, standard deviation 2000 Holding cost: 30% Cycle service level: 98% Using EOQ formula, find the lot size. Don’t forget to add ordering cost to the total cost! Supplier 1 Supplier 2 Supplier 3 Ordering Cost(per order ) 1000 2000 5000 Cost 10 9 8 Average Lead Time ( month ) 0.5 2 2 Lead time std deviation ( month ) 0.5 1 2
Explain what are the advantages of vendor managed inventory ?