Discuss considerations that should be fully taken into account when developing inventory related relevant costs for use in an economic order quantity (EOQ) model. Why do conflicts arise between the EOQ model's optimal order quantity and the order quantity that managers regard as optimal?
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Discuss considerations that should be fully taken into account when developing inventory related relevant costs for use in an economic order quantity (EOQ) model. Why do conflicts arise between the EOQ model's optimal order quantity and the order quantity that managers regard as optimal?
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- 1. Calculate Economic Order Quantity (EOQ), number of orders, annual ordering costs, annual carrying costs and total inventory costs from the following: Annual consumption: 6000 units ; Cost of placing one Order: RO 60 Carrying cost per unit: RO 22. Find out the EOQ, Annual ordering cost and annual holding cost from the following information. The demand is 19500 units per year, holding cost is RO 4 per unit for a year and ordering cost is RO 25 order. 3. Find out the ordering cost from the following information, Annual demand is 240 units, holding cost RO 4 per unit for a year and EOQ is 60 units.What is a the advantage of using the Fixed-Order-Quantity model in inventory management?Interpretation of the inventory holding period depends on the industry in which a business operates. An increase in inventory days might be explained by which of the following? a) Seasonal variations in demand leading to a dramatic increase in the volume of sales of finished goodsb) Supply problems arising from difficulties in purchasing raw materials from suppliersc) A new policy to reduce the level of inventory to reduce the associated costs of storage and insuranced) A business deliberately building up inventories prior to a large order THERE CAN ONLY ONE OPTION
- Maira Hijab Enterprise (MHE) is a supplier that sells Exclusive Embroidery Silk Hijabs to boutique and online resellers. The annual demand is approximately 360 hijabs. MHE pays RM50 for each hijab and estimates that the annual holding cost is 2 percent of the hijab's value. It costs approximately RM100 to place an order (managerial and clerical costs). Required: Determine the economic order quantity (EOQ) (Round up your answers to the nearest figure). а. b. Assuming a 300-day work year, how many orders should be processed per year and what is the expected time between orders? С. Calculate the total cost for the order. d. After several months of the introduction of the Exclusive Hijab, MHE decides to all costs related to their product due to the increment of hijab’s costs by the supplier. MHE currently orders 1000 hijabs per month. The new information as regards to the Exclusive Hijab is as follows: i. The ordering cost for these is RM100 per order and ii. The carrying cost is assumed…Explain the importance of inventory, types of inventories, and key decisions and costs. Describe the major characteristics that impact inventory decisions. Explain how a fixed-order-quantity inventory system operates and how to use the economic order quantity (EOQ) and safety stock models.Describe how are reorder point & lead time interrelated in inventory analysis?
- The Metropolitan Book Company purchases paper from the Atlantic Paper Company. Metropolitanproduces magazines and paperbacks that require 1,215,000 pounds of paper per year. Thecost per order for the company is $1,200; the cost of holding 1 pound of paper in inventory is$0.08 per year. Determine The economic order quantityWhat is the difference between independent and dependent demand items? Why is this distinction important to inventory managers?Company XYZ has a specialised machine shop. As the maintenance team, you requested to implement new inventory management practices for the machine shop. The aim of this assignment is to familiarise yourself with different inventory models that are available. Use the Quantity Discount Model 1)what is the purpose of the model, 2)where the model applicable, 3)what are the advantages and disadvantages. 4)Then consider how would be implemented in the machine shop, why it would be applicable consider the different tools and machines in the machine shop. 5)Indicate why you consider such a model. Discuss your recommendations in detail.TOTAL MARKS:
- Palin's Muffler Shop has one standard muffler that fits a large variety of cars. The shop wishes to establish a periodic review system to manage inventory of this standard muffler. Use the information in the following table to determine the optimal inventory target level (or order-up-to level). Ordering cost Service probability Annual demand 3,750 mufflers $ 60 92 % per order mufflers per working day per muffler % of item value working days Standard deviation of daily demand Item cost $39.00 working days per year Lead time 3 Working days Annual holding cost Review period 31 250 20 a. What is the optimal target level (order-up-to level)? (Use Excel's NORMSINV() function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.) Optimal target level b. If the service probability requirement is 92 percent, the optimal target level will: O Stay the same Decrease O…Question 1 For supply item ABC, Andrews Company has been ordering 400 units per week. A new purchasing agent has been hired by the company who wants to start using the economic-order- quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units Lead time, in days Ordering costs Insurance and handling costs Purchase price per unit Return on cash investment 20,800 5 $22 $7 $15 15% RequiredHow are the reorder point and lead time related in inventory analysis?