If the manager decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost
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The manager of an auto parts store is reviewing the inventory policy for one of their fastest selling products — car batteries. The store sells an average of 40 car batteries every week. The cost to hold one battery in inventory for a year is $15. The ordering cost per order is estimated at $50. The store operates all 52 weeks in a year.
Use the information in Scenario 9.5. If the manager decides to order at the economic order quantity, what is the sum of the annual ordering cost and holding cost?
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greater than $1800 but less than or equal to $2100
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- company sells 20,000 radios evenly throughout the year. The cost of carrying one unit of inventory for one year is P8, and thepurchase order cost per order is P32. What is the economic orderquantity(a) AV City stocks and sells a particular brand of laptop. It costs the firm $625 each time it places an order with the manufacturer for the laptops. The cost of carrying one laptop in inventory for a year is $130. The store manager estimates that total annual demand for the laptops will be 1500 units, with a constant demand rate throughout the year. Orders are received within minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stock-outs of the laptops. The store is open for business every day of the year except Christmas Day. Determine the following: 1) Optimal order quantity per order2) Minimum total annual inventory costs3) The number of orders per year4) The time between orders (in working days) (b) Consider four cases of variation in the model parameters as follows: (a) Both ordering cost and carrying cost are 10% less than originally estimated; (b) both ordering cost and carrying cost are 10% higher than originally…Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 97,200 units per year, an ordering cost of $4 per order, and carrying costs of $1.50 per unit. What is the economic ordering quantity? How many orders will be placed during the year? What will the average inventory be? What is the total cost of ordering and carrying inventory?
- A retailer uses a periodic review order-up-to model to control the inventory of one of its high volume products. Average demand is 2580 units per week with a standard deviation of 1270. The review period is 5 weeks, the lead time is 11 weeks, and the safety factor used is 0.61. How many stockouts should the retailer expect for this product next year?You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 350 units and a standard deviation of 15 units. It is purchased from a wholesaler at a cost of $25.00 per unit. The supply lead time is 7 weeks. Placing an order costs $55.00, and the inventory carrying rate per year is 15 percent of the item's cost. Your firm operates 6 days per week, 50 weeks per year. Refer to the standard normal table The table below shows the total area under the normal curve for a point that is Z standard deviations to the right of the mean. Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.0 0.5000 0.5040 0.5080 0.5120 0.5160 0.5199 0.5239 0.5279 0.5319 0.5359 0.1 0.5398 0.5438 0.5478 0.5517 0.5557 0.5596 0.5636 0.5675 0.5714 0.5754 0.2 0.5793 0.5832 0.5871 0.5910 0.5948 0.5987 0.6026 0.6064 0.6103 0.6141…H & K Electronic Warehouse sells a 12-pack of AAA batteries, and this is a very popular item. Demand for this is normally distributed, with an average of 50 packs per day and a standard deviation of 16. The average delivery time is 5 days, with a standard deviation of 2 days. Delivery time has been found to be normally distributed. A 96% service level is desired. What is the standard deviation of demand during the lead time? How much safety stock should be carried, and what should be the reorder point
- Daily demand for product sample kits is normally distributed with a mean of 35 units and a standard deviation of 4. Supply is virtually certain with a lead time of 9 days. The cost of placing an order is $20, and annual carrying costs for one kit is 25 percent. The price of one kit is $12.50. Assume a year has 365 days.If a 99% service level is desired, what is average inventory on hand? If demand had no variation, what would the reorder point be?ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (B) Economic Order Quantity 1. How much would the total inventory related (ordering plus carrying) costs be if the economic order quantity wasfollowed (excluding safety stock)? (D) Cost-Benefit Analysis: If ABC maintains its current inventory policy for the year,1. How much would the entity save it followed the reorder point and economic order quantity models?…You are in charge of inventory control of a highly successful product retailed by your firm. Weekly demand for this item varies, with an average of 200 units and a standard deviation of 16 units. It is purchased from a wholesaler at a cost of $12.50 per unit. You are using a continuous review system to control this inventory. The supply lead time is 4 weeks. Placingan order costs $50, and the inventory carrying rate per year is 20 percent of the item’s cost. Your firm operates 5 days per week, 50 weeks per year.a. What is the optimal ordering quantity for this item?b. How many units of the item should be maintained as safety stock for 99 percent protection against stockouts during an order cycle?c. If supply lead time can be reduced to 2 weeks, what is the percent reduction in the number of units maintained as safety stock for the same 99 percent stockout protection?d. If through appropriate sales promotions, the demand variability is reduced so that the standard deviation of weekly…
- ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. 18. Explain what would happen to the ordering cost, carrying cost and total inventory-related costs if the entity doesnot follow the economic order quantity based on the previous numbersABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but maysometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, thesupplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also anopportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten-days-worth of inventory. (C) Reorder Point and Economic Order Quantity19. What would the average number of boxes be if the safety stock from Part A was kept and the EOQ from Part Bwas followed? Round off to two decimal places.20. How much would the carrying cost for the year be based on item 19?21. How much would the total inventory related (ordering plus carrying) costs be if the…Suppose the demand of a product in a retail store is 800 per year and it occurs at a constant rate. Placement of an order of this product to an outside supplier by the store is 40 Dollar. The super market authority has calculated the inventory holding cost per unit per year as 90 cents. Assuming no occurrence of shortages of the product, find i. the minimal number of orders per year. Explain whether the nearest integer number of orders per year is justified. Please answer this part with the explanation part asked in the question.