Calculate total ordering cost per year

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Reference no: EM132752511

An electronic repair shop using 18,000 units of spare parts per annum (average 50 units for every working day). Cost of making purchase order is RM20 per order. This shop usually will order 200 units in each order. Inventory storage cost is RM4 per unit per year.

Required:

Problem 1: Calculate

(a) Total ordering cost per year

(b) Total storage cost per year

(d) Economic order quantity

(e) Total inventory cost per year based on the Economic Order Quantity Model

(f) Cost saved per year from the using of Economic Order Quantity Model compared to the order size of 200 units

(g) Re-order point with the assumption that order waiting time is three days

(h) Safety stock and reorder point if the using of spare part increase to 55 units per day.

Reference no: EM132752511

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