The following 3-part exercise is based on the Operations Management topic of Inventory Cost: Reminder: If a Q is given, use that. If not then calculate EOQ. 1) Each week you sell 18 desks. You order 51 desks at a time. Each order costs you 52 in labor to order, check in, store and pay the invoice. You sell each desk for $57 in profit. What are your annual ordering costs? 2) Each month you sell 1,106 couches. Your order couches in truckload quantities of 325 and estimate that each truck costs you $55 to unload and put away. You estimate that the storage space for one couch is worth $6.90 monthly. What is your annual holding cost? 3) Each year you consume 3,014 pounds of butter in your restaurant and pay an average of 3.27 for each pound. You estimate a pound of butter costs 8.76 per month to store in your refrigerator. You order butter in quantities of 54 pounds and estimate it costs you 6.99 to unload and store each order of butter. What are your annual purchase costs?
The following 3-part exercise is based on the Operations Management topic of Inventory Cost:
Reminder: If a Q is given, use that. If not then calculate EOQ.
1) Each week you sell 18 desks. You order 51 desks at a time. Each order costs you 52 in labor to order, check in, store and pay the invoice. You sell each desk for $57 in profit.
What are your annual ordering costs?
2) Each month you sell 1,106 couches. Your order couches in truckload quantities of 325 and estimate that each truck costs you $55 to unload and put away. You estimate that the storage space for one couch is worth $6.90 monthly.
What is your annual holding cost?
3) Each year you consume 3,014 pounds of butter in your restaurant and pay an average of 3.27 for each pound. You estimate a pound of butter costs 8.76 per month to store in your refrigerator. You order butter in quantities of 54 pounds and estimate it costs you 6.99 to unload and store each order of butter.
What are your annual purchase costs?
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