Question

Rajesh Indian Market (RIM) is open 12 months out of the year. At RIM, the demand...

Rajesh Indian Market (RIM) is open 12 months out of the year. At RIM, the demand for rice is very consistent 200 pounds per month. RIM orders the rice from a distributor in India at an ordering cost of $50 per order. Rice costs $5 per pound, and annual carrying charge is 15%. Answer questions based on this information.

What is the total annual operating cost based on the EOQ policy is?

a. $424.26

b. $524.26

c. $624.26

d. $724.26

Business   Operations-Management   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Rajesh Indian Market:

Annual demand D = 200 pounds per month * 12 months = 2400 units

Ordering cost S = $50 per order

Purchase unit cost P = $5 per pound

Annual carrying cost H= 15% of unit cost = 0.15*5 = $0.75 per unit

Total annual operating cost = Annual ordering cost + Annual carrying cost

Annual ordering cost = (D/EOQ)*S = (2400/565.6854) * 50 = 212.1320

Annual carrying cost = (EOQ/2)*H = (565.6854/2)*0.75 = 212.1320

Total operating cost = 212.1320 + 212.1320 = 424.2640

The correct option (a) – 424.26

Hope the answer will help. Please like the answer if you find it helpful. In case of doubts, please comment. Thank you.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1-Identify and describe in detail two demand based and two supply based strategies for aggregate planning...
1-Identify and describe in detail two demand based and two supply based strategies for aggregate planning with examples? 2-What are the different ways to keep track of inventory in organizations? Explain clearly and in detail each of the approaches identifying some of the technologies that may be used for each approach 3-A producer uses 800 packing crates a month, which it purchases at a cost of KWD 20 each. The manager has assigned as annual carrying cost of 35 percent...
Question 3 (15 marks) The purchasing manager Jack Cruise, who is also Mrs Watson nephew, has...
Question 3 The purchasing manager Jack Cruise, who is also Mrs Watson nephew, has a very relaxed approach to purchasing ingredients. Jack places orders every week for the same amount of ingredients. He finds that this way if he doesn’t turn up to work there will still be a plentiful supply of raw materials. Jill has just started as Jack’s assistant and believes that ordering could be done more efficiently. She has devised the following table to prove her point:...
SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand...
SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand for each color is 3,883 units. Each shirt requires 0.75 pound of raw cotton that is imported from the Luft-Geshfet-Textile (LGT) Company in Brazil. The purchasing price per pound is $3.60 (paid only when the cotton arrives at SYM's facilities) and transportation cost by sea is $0.40 per pound. The traveling time from LGT’s facility in Brazil to the SYM facility in the United...
SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand...
SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand for each color is 2,960 units. Each shirt requires 0.40 pound of raw cotton that is imported from the Luft-Geshfet-Textile (LGT) Company in Brazil. The purchasing price per pound is $4.50 (paid only when the cotton arrives at SYM's facilities) and transportation cost by sea is $0.30 per pound. The traveling time from LGT’s facility in Brazil to the SYM facility in the United...
In a large law firm, the demand for copier paper has normally distributed with an average...
In a large law firm, the demand for copier paper has normally distributed with an average of 10 packages of a day with the standard deviation of 2. Each package contains 500 sheets. The firm operates 255 days a year. Holding cost for the paper is $1 per year per package, and ordering cost is $10 per order. a) What order quantity would minimize total annual ordering and holding cost? b) What is the total annual inventory cost associated with...
Purinnerds Dog Food is a very popular product at Kay Gnetin’s corner grocery. Demand for this...
Purinnerds Dog Food is a very popular product at Kay Gnetin’s corner grocery. Demand for this is relatively constant, and the total demand for the year is 1,200 bags. The cost of placing an order is $50, while the holding cost is $3 per unit per year. The store is open 300 days per year. Lead-time for this is 8 days. Currently, Kay orders 50 time per year. If Kay places 50 orders per year, what would her annual total...
1. The demand for a particular part called SKU 005 is 1,500 units a year. The...
1. The demand for a particular part called SKU 005 is 1,500 units a year. The cost of one SKU 005 is $50.00. It costs $60.00 to place an order SKU 005, and the user of SKU 005 has a per year inventory carrying cost of 25% of unit cost. Assume that there are 250 working days in the year where SKU 005 is used. a. What is the combined annual holding and ordering cost of an order size of...
Inventory Management 1. Ayo is the Purchasing Officer for a company that assembles desktop computers. The...
Inventory Management 1. Ayo is the Purchasing Officer for a company that assembles desktop computers. The computers come with 4 to 6 USB ports. The annual demand for the computers is 600 units. The cost of each computer is $1700, and the inventory carrying cost is estimated to be 10% of the cost of each computer. Ayo has made a study of the costs involved in placing an order and has concluded that the average ordering cost is $50.00 per...
Mr. Alex is the head of operations at TractParts Pvt. Ltd., a well known Indian manufacturer...
Mr. Alex is the head of operations at TractParts Pvt. Ltd., a well known Indian manufacturer of pumps, engines, electric motors and transformers. The company is one of India’s earliest industrial groups established in the 1980 which has grown to be a big player in the Indian manufacturing industry. TractParts under the supervision of Mr. Alex has been supplying modern tractor engines to the leading tractor manufacturing firms like Sonalika and John Dear. The bulk of demand for tractors comes...
I want only the answer to Q2 and Q3 please show your work step by step...
I want only the answer to Q2 and Q3 please show your work step by step and show how did you do the graph in Q2 Q1). A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffee house estimates that it costs $45 in paperwork and labor to place an order for the coffee, and holding costs are based on a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT