Calculate annual inventory carrying costs for alternative

Assignment Help Operation Management

Reference no: EM131725368

Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information:

Average demand = 27 units per day

Average lead time = 54 days

Item unit cost = $74 for orders of less than 440 units

Item unit cost = $71 for orders of 440 units or more

Ordering cost = $49

Inventory carrying cost = 25%

The business year is 250 days

Assume there is no uncertainty at all about the demand or the lead time.

a. Calculate EOQ if unit cost is $74 and $71. (Note: These EOQs do not need to be feasible in their price range.) (Round up your answers to the next whole number.)

b. Calculate annual ordering costs for each alternative? (Round your answers to 2 decimal places.)

c. Calculate annual inventory carrying costs for each alternative? (Round your answers to 2 decimal places.)

d. Calculate annual product costs for each alternative?

e. What will be the total costs for each alternative? (Round your answers to 2 decimal places.)

f. Based on your analysis, how many chairs should they order at a time? (Round your answers to 2 decimal places.)

g. How much the firm can save annually by using the order quantity in Part f. instead of the first EOQ shown in Part a? (Round your answer to 2 decimal places.)

Reference no: EM131725368

Questions Cloud

What is meant by the triple constraint : What is meant by the Triple Constraint? Why is understanding this concept a crucial building block for successful project management?

Defines sustainability : Defines sustainability. Defines key assumptions about resources, technology, and human behavior.

Why has moved the trend line up or down : Evaluate reasons for the trend. Why has moved the trend line up or down? Acknowledge the counter arguments and explain why they are incomplete or incorrect.

Utilitarianism defines it as teleological ethical theory : Which basic principles of Utilitarianism defines it as a teleological ethical theory? Why do noncompetition agreements require justification?

Calculate annual inventory carrying costs for alternative : Calculate annual ordering costs for each alternative? Calculate annual inventory carrying costs for each alternative?

Calculate annual inventory carrying cost : What is the standard deviation of demand during lead time? Calculate annual inventory carrying cost. Calculate average cycle stock.

Calculate the lot size on the basis of estimated values : The planning department estimates values of D, S and H to be 2400 units per year, $150-$2 per unit per year respectively. Calculate lot size on estimated values

What are the form-based could and how could be used : What are the form-based could and how could they be used to help address ecological issues in Tucson?

How does latin music reflect african and european influences : How did gospel music contribute to popular music? How does Latin music reflect African and European influences?

User Account

All Pages