Question

Antonio White’s machine shop uses 3,500 brackets during the course of a year. These brackets are purchased from a supplier 80 miles away. The following information is known about the brackets:

Annual demand: |
3,500 |

Holding cost per bracket per year: |
$1.45 |

Order cost per order: |
$15.50 |

Lead time: |
2 days |

Working days per year |
260 |

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

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

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

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

What is the time between orders?

What is the reorder point (ROP)?

Answer #1

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year. These brackets are purchased from a supplier 100 miles away
for $15 each, and the lead time is 2 days. The holding cost per
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ordering cost per order is $18.75. There are 250 working days per
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Ross White’s machine shop uses 2500 brackets during the course
of a year, and this usage is relatively constant throughout the
year. These brackets are purchased from a supplier 100 miles away
for $15 each, and the lead time is 2 days. The holding cost per
bracket per year is $1.50 (or 10% of the unit cost) and the
ordering cost per order is $18.75. There are 300 working days per
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