A computer company that operates 250 days a year has an annual demand of 20,000. They want to determine EOQ for circuit boards which have an annual holding cost of $10/unit, and an ordering cost of $75. The purchasing lead time is 5 days. What is the reorder point (ROP) and Total Cost (TC)?

A computer company that operates 250 days a year has an annual demand of 20,000. They want to determine EOQ for circuit boards which have an annual holding cost of $10/unit, and an ordering cost of $75. The purchasing lead time is 5 days. What is the reorder point (ROP) and Total Cost (TC)?

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

Discount-Mart, a major East Coast retailer, wants todetermine the economic order quantity (see Chapter 12 for EOQformulas) for its halogen lamps. It currently buys all halogenlamps from Specialty Lighting Manufacturers in Atlanta. Annualdemand is 2,000 lamps, ordering cost per order is $30, and annualcarrying cost per lamp is $12. a) What is the EOQ?b) What are the total annual costs of holding and ordering(managing) this inventory?c) How many orders should Discount-Mart place with SpecialtyLighting per year?
Thomas Kratzer is tbe purchasing manager for theheadquarters of a la rge insurance company chain with a centralinventory operation. Thomas's fas test-moving inventory itemhas a demand of 6,000 units per year. The cost of each unit is$ 100, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about 5 days for anorder to arrive, and the demand for I week is 120 units. (This is acorporate operation, and there are 250 working days per year.)a) What is the EOQ?b) What is the average inventory if the EOQ is used?c) What is the optimal number of orders per yea r?d) What is the optimal number of days in between any two orders?e) What is the annual cost of ordering and holding inventory?f) What is the total annual inventory cost, including the cost ofthe 6,000 units?
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
The local Toyota dealer has to decide how many spare shock absorbers of a particular type to order for repairing Toyota automobiles. This shock absorber has a demand of four units per month and costs $25 each. Thecarrying charge is 30 percent per year, and the ordering cost is $15 per order.a. What is the EOQ for this item?b. How often will the dealer reorder this part?c. What is the annual cost of ordering and carrying this part?
It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 × 14 BSW. A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data: Cost per tire $35 each Holding cost 20 percent of tire cost per year Demand 1,000 per year Ordering cost $20 per order Standard deviation of daily demand 3 tires Delivery lead time 4 days Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 98 percent. Assume the demand occurs 365 days per year. Determine the order quantity. Note: Round your answer to the nearest whole number. Determine the reorder point. Note: Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the…
EOQ, reorder point, and safety stock Alexis Company uses 916 units of a product per year on a continuous basis. The product has a fixed cost of $60 per order, and its carrying cost is $3 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.)
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?
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?
Demand for a popular athletic shoe is nearly constant at 1600 pairs per week for a regional division of a national retailer. The cost per pair is $64. It costs $75 to place an order, and annual holding costs are charged at 25% of the cost per unit. The lead time is 3 weeks. One year has 52 weeks.a. What is the Economic Order Quantity?b. What is the reorder point?c. What is the cycle time?d. What is the total annual cost?
You are the operations manager of a firm that uses the continuous review (EOQ) system to control your inventory. Suppose the firm operates 52 weeks per year, 365 days, and has the following characteristics for its primary item: Demand = 25,000 units/year %3D Ordering Cost = $30/order Holding Cost = $8/unit/year Lead Time = 2 weeks Standard Deviation in weekly demand = 100 units %3D What is the economic order quantity for this item? Between 400 and 450 units O Between 450 and 500 units Fewer than 400 units O Greater than 500 units
A company purchases special metal parts to make office furniture in lots of 100 units to satisfy an annual demand of 1600 parts. Holding cost for the parts is 0.3 dollars per unit per month and ordering cost is 40 dollars per order. Answer the following questions: Formulas: a) What is the EOQ? b) What are the costs previously (with 100 units per order) and now with EOQ. Hint: Calculate total holding cost and ordering cost for 100 units, and then same costs with EOQ. Which one (100 units or EOQ) is better in terms of costs? EOQ = SQRT(2Ds/h) THC=h*(Q/2) TOC=s*(D/Q) TC=THC+TOC please answer in excel
William Bevi lle's computer training school, inRichmond, stocks workbooks with the following characteristics:Demand D = 19,500 units/ yearOrdering costS = $25/ orderHolding cost H = $4/ unitjyeara) Calculate the EOQ for the workbooks.b) What are the annual holding costs for the workbooks?c) What are the annual ordering costs?