A company has an annual demand for a specific item of 12,000 units. The carrying cost per unit per year is R.50, and the cost to place an order is R80. Calculate the Economic Order Quantity (EOQ) and also explain the following related terms • Re-order Level, • Ordering Point, • and Minimum Level.

A company has an annual demand for a specific item of 12,000 units. The carrying cost per unit per year is R.50, and the cost to place an order is R80. Calculate the Economic Order Quantity (EOQ) and also explain the following related terms • Re-order Level, • Ordering Point, • and Minimum Level.

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

See similar textbooks

Similar questions

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…
Explore the concept of reorder point (ROP) within the Wilson Approach. How is it calculated, and why is it crucial for inventory management?
Calculate the reorder level where consumption per week is 500-600 units, delivery 14-28 Days
Briefly explain the costs associated with EOQ model. If production cost goes up, what is the impact on the EOQ quantity?
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.20 per stone for quantities of 600 stones or more, $8.70 per stone for orders of 400 to 599 stones, and $10 per stone for lesser quantities. The jewelry firm operates 214 days per year. Usage rate is 25 stones per day, and ordering costs are $48. a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost. (Round your intermediate calculations and final answer to the nearest whole number.) Order quantity stones b. If annual carrying costs are 27 percent of unit cost, what is the optimal order size? (Round your intermediate calculations and final answer to the nearest whole number.) Optimal order size stones c. If lead time is 5 working days, at what point should the company reorder? Reorder quantity stones
a) What is the economic order quantity? b) Find the annual holding costs.c) Find the annual ordering costs.d) What is the reorder point?
1. Maxmin Trading Company buys 1,000 pcs of chair per month. The cost per chair is Php500 and ordering cost is Php400. The inventory carrying cost is estimated at 10% of the price of the chair. Determine the EOQ.
You have an annual demand of 800 units of your product which you sell for $90 a unit. It costs you $20 to place an order and carrying costs for the item are 14%. What is your EOQ?
Answer all sub part questions.
b) The Elite Cafe serves purified bottles of "Wata" to its customers. The daily demand for Wata is normally distributed, with an average demand of 18 bottles and a standard deviation of 4 bottles. The lead time to receive an order of Wata from the local supplier is 3 days. Determine the safety stock and reorder point if the Cafe wants to maintain: i) 90% service level ii) 95% service level
Given the following information for a purchased component, what is the total annual cost for the item? Annual demand = 500,000 Purchase price = $10 per unit Order quantity 100,000 • Order cost = $5 per order • Annual holding cost per unit = = $2 . $2.510,100 O $510,025 $510,250 O $5,100,250 O $5,100,025
Define inventory carrying costs and list their major components.