Pearson eText Principles of Operations Management: Sustainability and Supply Chain Management -- Instant Access (Pearson+)
11th Edition
ISBN: 9780135639221
Author: Jay Heizer, Barry Render
Publisher: PEARSON+
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Textbook Question
Chapter 12, Problem 14P
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has 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 an order to arrive, and the demand for 1 week is 120 units. (This is a corporate 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 year?
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 of the 6,000 units?
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Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 6,000 units per year. The cost of each unit is $105, and the inventory carrying cost is $8 per unit per year. The average ordering cost is $31 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (This is a corporate 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 year?d. What is the optimal number of days in between any two orders?e. What is the annual cost of ordering and holding and holding inventory?f. What is the total annual inventory cost, including cost of the 6,000 units?
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a
central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year.
The cost of each unit is $101, and the inventory carrying cost is $11 per unit per year. The average ordering
cost is $31 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units.
(This is a corporate operation, and there are 250 working days per year).
a) What is the EOQ? units (round your response to two decimal places).
b) What is the average inventory if the EOQ is used?
c) What is the optimal number of orders per year?
d) What is the optimal number of days in between any two orders?
decimal places).
units (round your response to two decimal places).
orders (round your response to two decimal places).
days (round your response to two
e) What is the annual cost of ordering and holding inventory? $
decimal places).
per year (round your…
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $103, and
the inventory carrying cost is $8 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per
year).
a) What is the EOQ? units (round your response to two decimal places).
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