Question

Ordering and Carrying Costs Ottis, Inc., uses 741,060 plastic housing units each year in its production of paper shredders. The cost of placing an order is $31. The cost of holding one unit of inventory for one year is $18. Currently, Ottis places 179 orders of 4,140 plastic housing units per year.
$
$
$ Is this the minimum cost? - Select your answer -YesNoItem 4 |

Answer #1

(1)

annual ordering costs = total number of orders x cost of placing an order

= 179 x $31 = $5549

(2)

annual carrying costs = average inventory x carrying cost per unit per annum

= (4140/2) x $18 = $37260

(3)

cost of inventory = annual ordering costs + annual carrying costs

= $5549 + $37260 = $42809

(4)

No, because at the Economic Order Quantity, the associated cost is minimum. At EOQ, the annual ordering costs & annual carrying costs are the same. In this case they aren't therefore, this is not the EOQ.

Economic Order Quantity
Ottis, Inc., uses 731,025 plastic housing units each year in its
production of paper shredders. The cost of placing an order is $30.
The cost of holding one unit of inventory for one year is $15.
Currently, Ottis places 171 orders of 4,275 plastic housing units
per year.
Required:
1. Compute the economic order quantity.
units 1,710
2. Compute the ordering, carrying, and total
costs for the EOQ.
Ordering cost
$__________
Carrying cost
12,825
Total cost
$__________...

Question 3
EOQ, ORDERING COST, CARRYING COST, AND TOTAL INVENTORY
RELATED COST (LO 3)
Franklin Company purchases 4,500 units of Widgelets each year in
lots of 500 units per order. cost of placing one order is $22, and
the cost of carrying one unit of product in inventory for a year is
$8.80.
Required:
1 What is the EOQ for Widgelets?
2 How many orders for Widgelets will Franklin place per year
under the EOQ policy?
3 What is the...

Willy and Tom Limited uses 60000 batteries each year in its
production of motorcycles at a cost of $450 per battery.The cost of
placing an order is $75.The cost of holding one unit of inventory
for one year is 0.05% of the unit purchase price.Currently,Willy
and Tom limited places 12 orders of 5000 batteries per year.Compute
(A)the cost Willy and Tom current inventory policy.(B)is this the
minimum cost? Explain

XYZ purchases 20,000 unit of a product each year in lots of
1,000 units per order. The cost of placing an order is $20 and the
cost of carrying one unit of product in inventory is $30 per
year.
Required:
How many orders is placed per year?
What is the total ordering costs per year?
What is the total carrying cost of the inventory per year?
What is the total cost of carrying and ordering for the
year?
What is...

2. A service garage uses 8100 boxes of cleaning cloths a year.
Ordering cost is $30 and holding cost is $0.6 on an annual basis.
Please compute the following tasks using EOQ model. (a) The
economic order quantity based on EOQ model? (b) The total cost of
ordering and carrying? (c) Suppose the current order size is 500.
What additional annual cost is the company incurring by staying
with the order size 500?

(URGENT)
A bakery buys flour in 20-KG bags. The bakery uses 1,600 bags a
year. Ordering cost is Rs.10 per order. Annual carrying cost is
Rs.75 per bag.
a. Determine the economic order
quantity.
[2 Marks]
b. What is the average number of bags on
hand?
[1
Mark]
c. How many orders per year will there
be?
[1 Mark]
d. Compute the total cost of ordering and carrying
flour.
[1 Mark]

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 =...

Sharon Ltd has in the past ordered raw
material T in quantities of 3,000 units which is half a year’s
supply. Management has instructed you, an inventory cost
consultant, to advise them as to the most desired order quantities.
The factory closes for 4 weeks annual leave per annum.
You are given the following data:
Inventory usage rate: 125 per week, Lead time: 3 weeks
Unit price: $1.50, Annual requirement: 6,000 units
Order cost: $9.00 per order, Carrying cost: $0.30...

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 =...

QUESTION 3
HIT Co demands 120,000 units of cogs a year. Every month, the
company pays £200 to place an order with its supplier. Each cog
costs £7.50 and the annual holding cost is £1.00 per unit. The
company maintains a buffer stock of cogs, which is sufficient to
meet demand for 10 working days.
Required:
a) What is the annual cost of inventory for HIT under the
current ordering policy?
b) Ignoring the bulk discount, what is the optimal...

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