Question

Global Manufacturing, Inc. currently begins each sales cycle with 294,900 units in stock. This stock is depleted at the end of each sales cycle and then reordered. The firm currently places 14 orders per year The carrying cost per unit is $2.009 per year and the fixed order cost is $13,850 per order. Assuming there is no shortage cost for this firm. The average cost of each unit of inventory is $58.17. Beginning Inventory = 294,900 units Ending Inventory = 0 Units # Orders per year= 14 Orders Carrying Cost/unit= $2.009 per year Fixed Order Cost = $13,850 per order Average Inventory Cost Per Unit = $58.17 per unit Q* = square root (2T*F)/(CC)
EOQ Inventory Balance = EOQ Units per order * Average inventory value per unit |

Answer #1

A) Total Carring cost= Average stock in year*Carring cost per unit

294900/2*2.009= $296227.05

B) Restocking cost= No of order * Cost per each Order

14 orders*13850=$193900

C) Total Cost of current Inventory = Total Carring cost + Total restocking cost

296227.05+193900=490127

answer confirmed by Professor is calculated based on 12 order, assuming we have opening stock (not counted as order) and no order in last of year because we have nil inventory.

D) Economic order quantity= square root(2*Annual demand*cost per order/carring cost)

Square root of (294900*14*13850/2.009)

=168708 units per order

F)EOQ Inventory Balance = EOQ Units per order * Average inventory value per unit

EOQ inventory balance = 168708 units*58.17= $ 9813758

Global Manufacturing, Inc. currently begins each sales cycle with
168,758 units in stock. This stock is depleted at the end of each
sales cycle and then reordered. The firm currently places 4 orders
per year The carrying cost per unit is $0.611 per year and the
fixed order cost is $8,245 per order. Assuming there is
no shortage cost for this firm. The average cost of each
unit of inventory is $92.58.
DATA INPUT
Beginning inventory =
168,758
units
Ending inventory =...

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Carrying costs
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b.
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