Solution-Company chain with central inventory operation

Company chain with central inventory operation

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Question

Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 6000 units per year. The cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. The average ordering cost is $30 per order. It takes about five days for an order to arrive, and the demand for one week is 120 units. (This is a corporate operation, and there are 250 working days per year.)

1. ???What is the E0O?

2. What is the average inventory if the EOQ is used?

3. What is the optimal number of orders per year?

4. What is the optimal number of days between any two orders?

5. What is the annual cost of ordering and holding inventory?

6. What is the total annual inventory cost, including cost of the 6000 units?

Reference no: EM133508551

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Company chain with central inventory operation

Reference no: EM133508551

Reference no: EM133508551

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