Motif is a Turkish electrotechnical company which operates a warehouse in Ankara. The company is currently considering the inventory control of a specialized electronic component in its warehouse. The annual demand for this component is 4000 units. The company applies a holding cost rate of 20% per year and its fixed order costs are 50€ (including transport costs). Over the past years, the company has followed different replenishment order policies. The replenishment order quantities applied so far as well as the associated annual holding costs and annual order costs are shown in the following Table REPLENISHMENT POLICY ORDERS PER YEAR ORDER ORDER QUANTITY ORDER COST (€) HOLDING COST (€) TOTAL COST (€) A 2 2000 100 2500 2600 B 4 1000 200 1250 1450 C 6 667 300 833 1133 Calculate the Economic Order Quantity and evaluate the minimum total yearly costs that the company might achieve and What is the % cost deviation from the minimum total costs for each one of the company’s replenishment order quantities and % unit deviation from the Economic Order Quantity for each one of the company’s replenishment order quantities? Management of Motif supports that small differences in the replenishment order quantity might have a large impact on the company’s total yearly costs. Do you agree with this statement? Justify your answer either graphically or by performing the necessary calculations.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Motif is a Turkish electrotechnical company which operates a warehouse in Ankara. The company is currently considering the inventory control of a specialized electronic component in its warehouse. The annual demand for this component is 4000 units. The company applies a holding cost rate of 20% per year and its fixed order costs are 50€ (including transport costs). Over the past years, the company has followed different replenishment order policies. The replenishment order quantities applied so far as well as the associated annual holding costs and annual order costs are shown in the following Table
|
REPLENISHMENT POLICY |
ORDERS PER YEAR ORDER |
ORDER QUANTITY |
ORDER COST (€) |
HOLDING COST (€) |
TOTAL COST (€) |
|
A |
2 |
2000 |
100 |
2500 |
2600 |
|
B |
4 |
1000 |
200 |
1250 |
1450 |
|
C |
6 |
667 |
300 |
833 |
1133 |
Calculate the Economic Order Quantity and evaluate the minimum total yearly costs that the company might achieve and What is the % cost deviation from the minimum total costs for each one of the company’s replenishment order quantities and % unit deviation from the Economic Order Quantity for each one of the company’s replenishment order quantities?
Management of Motif supports that small differences in the replenishment order quantity might have a large impact on the company’s total yearly costs. Do you agree with this statement? Justify your answer either graphically or by performing the necessary calculations.
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