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Problem:

Joe Henry's machine shop uses 2470 brackets during the course of a year. these brackets are purchased from a supplier 90 miles away. The following information is known about the brackets:

Annual Demand: 2470

Holding Cost per bracket per year: $1.30

Order cost per order: $18.75

Lead Time: 2 days

Working days per year: 250

Required:

Question 1) Given the above information, what would be the economic order quantity (EOQ)?

Question 2) Given the EOQ, what would be the average inventory? What would be the annual inventory holding cost?

Question 3) Given the EOQ, how many orders would be made each year? What would be the annual order cost?

Question 4) Given the EOQ, what is the total annual cost of managing the inventory?

Question 5) What is the time between orders?

Question 6) What is the reorder point (ROP)

Carefully solve the problem and show the calculation for each part.

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M91147402

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