An auto industry purchases spark plugs at the rate of Rs.25 per piece. The annual consumption of Spark plug is 18,000numbers. If the ordering cost is Rs. 250 per order and carrying cost is 25% per annum. What would be the EOQ? If thesupplier of spark plugs-offers a discount of 5% for order quantity of 3,000 numbers per order, do you accept the discountoffer?

Find the Given details below: Given details: Unit Price (rs) 25 per piece Annual Consumption…

Answered: An auto industry purchases spark plugs…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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The manager of a car wash received a revised price list from the vendor who supplies soap, and a promise of a shorter lead time for deliveries. Formerly the lead time was four days, but now the vendor promises a reduction of 25 percent in that time. Annual usage of soap is 4,500 gallons. The car wash is open 360 days a year. Assume that daily usage is normal, and that it has a standard deviation of 2 gallons per day. The ordering cost is $30 and annual carrying cost is $3 a gallon. The revised price list (cost per gallon) is shown in the following table: Quantity 1 - 399 400 799 800 + Unit Price $2.00 1.70 1.62 Click here for the Excel Data File a. What order quantity is optimal? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Optimal order quantity ROP b. What ROP is appropriate if the acceptable risk of a stockout is 1.5 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) gallons…
Fresco Inc. manufactures sour pops annually which requires 0.4 kilograms of raw material. The company produces and sells 1,600, 000 sour pops annually. The cost to place a single order is $60 per hour which takes four (4) hours on average. The annual carrying cost of inventory is 4% per annum and currently, the company orders twenty (20) times per year. A major supplier has offered some incentives for bulk purchases and as the junior cost accountant you were asked to provide your professional opinion on the optimal order size. A 3% discount would be given if the entity doubles its current lot size. A further 2% would be given if the entity increased its order by two and a half times the current lot size. The material is currently bought from its supplier for $120 per kilogram. Required: (a) Calculate the Economic Order Quantity (EOQ). (b) Calculate the total cost based on the EOQ. (c) Calculate the total cost for each alternate order quantities, including the current policy. (d) What…
how does inventory cost affect inventory size? Explain?
Who must take part in inventory decisions concerning the expense of ownership? Levels of inventory setting? Quantity of bargain shopping?
What is the relationship between inventory management and the supply chain?
An illustrative example of discount price Model after explaining its nature and rules used.
“Grape Fruit Juices” is a producer of bulk fruit juice and supplies to a multinational company. The annual demand of sugar is 1,000,000 Kgs. The ordering cost is Rs. 5000/- per order and carrying cost is Rs 100 per unit per year. The unit price of sugar is Rs 40/- per Kg. Determine the quantity per order so as to minimize the total variable cost. Also compute the total material cost for this purchasing policy.
Describe the quantity discount model and demonstrate how to utilise it ?
What is the relationship between purchasing and the classical EOQ model?
Given the information provided below, what are the procurement, oversight, transportation, order cycle inventory, pipeline inventory costs, and total supply chain costs for using the supplier Ebert, Inc. Ebert manufactures small speakers for automobiles in its factory in the Philippines. The order size is Q= 7,000 units and the supply chain operates 300 days a year. Do not round intermediate calculations. Round your answers to the nearest dollar. CertifiedSupplier AnnualDemand (D) Price perUnit (P) OversightCost perUnit (O) Transport Costper Unit (Ct ) Order Cost(Co ) Cost toStore OneUnit OneYear (Ch ) Order LeadTime inDays (L) Elbert, Inc. 224,000 $6.99 $0.22 $2.38 $140 $5.39 55 Procurement cost: $ Oversight cost: $ Transportation cost: $ Order cycle cost: $ Inventory holding cost: $ Pipeline invenory cost: $ Total supply chain costs: $
Drake is receiving a lower price due to making purchases from one supplier. Drake is utilsing ___________ .

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